Hi Lou,

Whats your take on- STB TSX

Always enjoy your comments.

John

 

Hi John,

Student Transportation Inc., ( STB TSX) provides bus services to school districts in Canada and the US. Thirty percent of school bus services in North America are provided by some 4,000 private operators which looks like a segment ripe for consolidation.

STB has already racked up 35 acquisitions to date and will continue to search for good quality assets to add to their portfolio. The company operates 6,300 vehicles and is one of the largest operators in the industry. In addition the company offers a generous dividend which at its current price yields 11.6%.

The three year chart paints the picture of a stock that has broken to the upside and is enjoying a nice ride from the 2009 lows. There is resistance at $5.00 that needs to be overcome if STB is to continue to generate capital gains for its shareholders. There is an unbroken trend line in place as well as a golden cross which suggests that there is still some gas left in the tank.

The six month chart provides a view of the recent trading indicating that the shares of STB have tested support on the 50 day moving average repeatedly which suggests that investors are buying on the dips. The MACD is aslo providing a good signal generator for entry and exit points for the stock.

Given the generous dividend, in addition to an unbroken uptrend and a golden cross STB is providing ample evidence of a stock that has more to give. The one factor to keep in mind is that the summer season is a difficult one for school bus operators. With schools out for summer holidays revenue dries up for the bus operators who scramble to find bookings to make up for the regular income that flows during the academic year.

Happy Capitalism!