I’m looking at STB-T as an income on my TFSA. What are your thoughts on it? Safe time to buy without to much down side?
I last posted on the prospects for Student Transportation Inc. (STB TSX) on March 15, 2010 on a request from John. At the time it looked like the shares of the company had more to give and it certainly did. Just over a year ago the dividend yield was 11.6% and the stock was in an uptrend. Currently the yield is 8.4% and the stock is in a downtrend. Lets put the charts under the scope and see if this is a good time to get on the bus.
The three year chart embellishes our appreciation of a solid uptrend and the wealth it generates for investors who get on the ride at the right time. The advance started in June of 2009 when the shares were trading at $2.75. When John asked about STB in March of 2010 it had already made a nice move to $4.85 but it appeared to have more left in the tank. By April of 2010 it got overbought and pulled back in May to $4.50 where a double bottom formed sending the stock to the recent high of $7.00.
The six month chart depicts the overbought situation signalled by the RSI in February of 2011. The MACD also indicated that the momentum was shifting to the sell side at the same time. STB met resistance at $6.90 and then pulled back to $6.60 where it caught a bounce off its 50 day moving average. The move to $7.00 in late March was followed by a lower high in early April setting up a breach below the 50 day moving average.
I am not sure that now is the best time to be buying STB. The company is set to report its Q3 results on May 11, 2011 which is an event that can cut both ways. That in concert with the fact that neither the RSI or the MACD are suggesting a shift in momentum to the buy side puts a yellow flag on the track for me. Best case scenario is that it retest support at $6.60 and catches a bounce. Worse case we have to retest support at $6.00 along the 200 day moving average.