Enerplus Corp. offers a rich dividend yield of 8.1%

Sep 12th, 2011 – Comment

There has been some recovery but every advance has met resistance along the 50 day moving average. Also of note is the death cross that formed in August. Currently both the RSI and MACD are indicating that there is more selling to come.


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Hi Lou,

Would like your opinion on Enerplus,and if its oily, gassy..nice dividend.

              Ted

 

Hi Ted,

 

I last covered Enerplus Corp. ( ERF TSX) on June 02, 2010 for Zoro. It was noted that the stock had built a big base which to some observers looks like a coiled spring ready to pop. Which by the end of August 2010 is what happened.

The company has a fairly balanced production mix with 53% coming from natural gas and the remainder crude oil and natural gas liquids. The company expects 10-15% production growth through 2012 and a slight shift in production to 49% crude oils and natural gas liquids.

The company had to cut its 2011 daily production outlook from a range of 78,000 to 80,000 barrels of oil equivalent per day to 76,000 to 78,000 BOED . The reduced outlook was mostly a result of weather conditions that held back drilling activity. The 2011 captial expenditure budget of $770 million is skewed to increasing crude oil production.

The charts will provide additional evidence to the analysis.

 

The three year chart illustrates the advance that started as the base building spring uncoiled in August of 2010. The move from $22.00 to the January 2011 high of $32.50 generating a 47% gain. Not to look a gift horse in the mouth but the uptrend only had so much gas in the tank and now we are looking at a sustained retreat.

 

 

 

 

The six month chart provides a  focus on the factors that have been in play in 2011. The stock breached support at $29.50 as, like all stocks, it got caught up in the panic selling that followed the cut of the debt ratings of U.S. Debt.

There has been some recovery but every advance has met resistance along the 50 day moving average. Also of note is the death cross that formed in August. Currently both the RSI and MACD are indicating that there is more selling to come.

At this moment I don’t see an entry point but I can’t take my eye off the 8.1% dividend yield. There is support at $26.50 but it would be prudent to see if it holds over the next few sessions. If it doesn’t hold then we may have to retest $24.50. At $24.50 its a buy. The company is scheduled to report Q3 results on November 10, 2011.

 

Make it a profitable day and happy capitalism!

 

 

 

 

 

 

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