Futuremed Healthcare Products Corp. needs a crash cart

Oct 5th, 2011 – 2 Comments

The six month chart illustrates the breach of support at $7.00 in September of 2011 and what looks like a death cross forming.


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Lou, 

 Futuremed. Can you do an analysis?

Thank you
Brian
Vancouver Island

 

Hi Brian,

Thanks for the assignment. Futuremed Healthcare Products Corp. ( FMD TSX) is in need of some immediate attention.The stock has been selling off  for most of the the last eighteen months and that’s never a good thing for investors. FMD provides health care supplies to nursing homes across Canada with government as their primary customer. The management discussion and analysis for the second quarter of 2011 cited increased competition and weaker demand as challenges that need to be addressed.

A survey of the charts will provide better visibility as to the prospects for FMD.

 

 

The three year chart provides a number of patterns worth exploring. The double top that formed between December of 2009 and February of 2010 set the stage for the huge retreat that moved the shares from  the high of $9.75  to $6.15 by December of 2010.

A death cross formed in June of 2010 when the stock was trading at $9.00 signalling that investors should have been looking to get off the ride.The stock did get a lift from the  December 2010 lows back to $8.25 by the summer of 2011 but that’s where the trend reversed back to the downside.

 

 

 

 

 

The six month chart illustrates the breach of support at $7.00 in September of 2011 and what looks like a another death cross forming. In addition the RSI and MACD are not signalling a reversal of the downtrend. 

 Another thing to keep in mind is that the stock is not very liquid and thin volume can move the stock in either direction.  The dividend yield of 11.8% and a market capitalization of just under $88 million also provide evidence of a higher risk profile.

If you are going to chase FMD make sure that you take into account all of the factors discussed.  The stock has lost a lot of value since early 2010 and the last thing that you want is an investment in health care that puts your portfolio in long term care.

Make it a profitable day and happy capitalism!

Categories: Health Care
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