Think about taking some profits

Jan 8th, 2010 – 1 Comment

Paper profits are nice but cashing in on some of your holdings will provide you with an opportunity to diversify. Trees don’t grow to the sky and stocks don’t just go up.


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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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Canacol

Lou,
I wrote you back in October re : CNE when it was ~.25. It is now ~.70 and I would still like to hear your analysis of the stock.
Thanx

Robbie

 

Hi Robbie,

Thanks for bringing Canacol Energy Lt. (CNE TSXV) back to my attention. It has had a great run and these are the times we ask ourselves should we stay or  should we go?

cne2

The three year chart  provides a clear image of the advance off the $0.06 lows of late 2008 and the steady advance it has enjoyed. A golden cross formed in June of 2009 and the uptrend line has not been broken to the downside.

 

 

 

 

cne

The six month chart does pose some concerns regarding a continuation of the advance. The RSI indicates that the stock has been overbought since December of 2009 and the MACD looks to be turning down. In addition the price of the stock has moved significantly above the 50 day moving average. These factors are indicating a pull back is expected.

The go forward plan for CNE is a to use their $30M in cash to fund their 2010 development programs in Columbia, Brazil, and Guyana and increase their production of oil and natural gas.

The average daily volume over the last 3 months has been 1.6M shares so CNE is fairly liquid.

The big jump in the stock in December of 2009 was driven by results ,that to say the least, were robust. Two wells in Columbia tested at over 12,000 barrels of oil per day combined which if they are brought into production at even half those volumes would double CNE’s output.

I like the story and the fact that management has been driving results with the drill bit. However given that you are in the stock at $0.25 it would be wise to think about taking some profits. Paper profits are nice but cashing in on some of your holdings will provide you with an opportunity to diversify. Trees don’t grow to the sky and stocks don’t just go up.

Happy Capitalism!

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