Gibson Energy Inc. poised to move higher

Nov 7th, 2011 – Comment

The ascending triangle that has formed is a continuation pattern that suggests that the advance could continue


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Your thoughts on Gibson Energy.

Ray

 

Hi Ray

 

Gibson Energy Inc. (GEI TSX) just completed its initial public offering in June of this year. Market conditions at the time were not favorable to the anticipated price of between $18.00 and $22.00 and as a result the deal got done at $16.00. The company has been in business for 50 years with a focus in the midstream energy sector. The  market capitalization of GEI is $1.2 billion, it offers a dividend yield of 6% and is scheduled to report Q3 November 7, 2011 after the close of trading.

A review of the chart will provide some information but the short trading history will have to be taken into account.

 

 

 

The six month chart indicates that the shares have met some resistance at $19.00 that will have to be taken out if the uptrend is to be sustained. The ascending triangle that has formed  is a continuation pattern that suggests that the advance could continue. It is however not a guarantee.

At this point it’s hard to make a full evaluation of the potential that GEI offers given that the data set is so small. But with a 6% yield, an ascending triangle, good support along the 50 day moving average, over 50 years of success growing its business, and a MACD that looks to be turning higher, there seems to be enough evidence that there is more to come.

At some point you will have to take into account that on average most IPO’s return to their issue price within a year. Make sure to watch the trend so that you can capture as much of the upside as possible.

 

Make it a profitable day and happy capitalism!

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