Go west and consolidate

Dec 23rd, 2009 – 1 Comment

That with a strong uptrend on the chart and other supporting patterns make the risk reward trade off worth taking.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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western

Hi there Lou, and thanks for your really informative column in globeinvestor. Could I please get your opinion on Western Financial Group (WES) on TSX.

Merry Christmas to you.

Neil in Edmonton

 

Hi Neil,

 

Best of the Christmas season to you and your  family as well my friend!

Western Financial Group has had a nice lift off the March lows as investors came to appreciate the opportunity in serving communities in Western Canada.  The charts also supports a further review of the stock.

wes

There are a number of positive patterns visible on the three year chart. A double bottom which signalled the trend reversal from the sell off, an intact trend line below the advance and a golden cross. There is some resistance at $2.60 but not a ton.

 

 

 

The company has been a consolidator in the financial services industry in Western Canada with a focus on smaller communities that offer opportunities for growth as the competition looks to exit these markets. In 2009 WES completed three acquisitions that expanded their geographic reach and the palette of services offered.  2008 was also an active year for acquisitions.

Q3 results had earnings per share rising from $0.04 to $0.06 year on year and the company offers a dividend yield of 1.7%.

 

wes2The three month chart provides a view of the resistance at $2.60 and the golden cross that signaled the continuation of the uptrend in August when the stock was trading at $1.80. A 44% return in 5 months will make for a happy holiday season for those that caught the ride.

The MACD is providing an indication that the uptrend has some juice left in it and as mentioned earlier the resistance at $2.60 doesn’t appear substantial. The average daily volume over the last 3 months has been 55,296 shares which provides sufficient but not spectacular liquidity.

If you accept the theory that 2010 will have the resource sector providing leadership then that will benefit the west and provide opportunities for WES to expand further into their area of  geographic strength. That with a strong uptrend on the chart and other supporting patterns make the risk reward trade off worth taking.

MAKE IT A BIG CHRISTMAS!

Categories: Financial Services
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