ADF Group Inc. a candidate for a tax loss sale

Dec 10th, 2010 – Comment

Best plan from here – take the tax loss. If you really like the story put this one on your watch list and look for a trend reversal. The best time to buy a stock – is when its going 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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I have some shares in ADF Group I bought at $3.50  almost two years ago. Should I cut my loses and cash in or keep it for a bit longer?

 Thank you in advance,
George
Hi George,
The wording of your question says it all. Sell or Hold? I would say that at this time of the year you should think about dumping your losers for tax purposes. If the situation changes in the new year you can always get back on the ride if its going up. Lets consult the charts for a better sense of  the potential for ADF Group Inc. (DRX TSX) in 2011.
The three year chart depicts the asset destroying trend that has had a grip on DRX since 2008. The stock peaked at a high of $7.00 in December of 2007 but it hasn’t traded in that range since. The best part of this chart is that there does seem to to be support at $1.50.
The average daily volume over the last three months is 63,477 shares. Over the last thirty days we have seen only six days of better than average volume. The last two trading days has seen better than average volume suggesting that tax loss selling is underway.
On December 9, 2010 DRX reported Q3 results which saw lower revenue and earnings.  Given that the company operates in the structural steel industry it should come as no surprise that demand has been weak over the last three years.
The six month chart illustrates the downtrend that has been in place. You can also see the support at $1.50 but also the resistance along the 50 day moving average. The MACD and RSI are both trending higher but not convincingly.
Best plan from here – take the tax loss. If you really like the story put this one on your watch list and look for a trend reversal. The best time to buy a stock – is when its going up.
Happy Capitalism!
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