Superior Plus Corp. meeting resistance

Mar 2nd, 2012 – 2 Comments

I expect a pull back from these levels and need more convincing that the company is back on a growth track.


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Hello Lou, I am a big fan and read your stock analysis all the time and always learn something new. I would like to know your thoughts on Superior Plus? It is on the move due to recent news releases. What do you think of debt ratio? How do you factor impairments into you stock valuation? And lastly what do you think of the chart?

Thank you!
Payam

 

Hi Payam,

Thanks for the assignment. This will be the sixth time that the case for Superior Plus Corp. (SPB TSX) has been examined since September of 2010. If you think that six checkups over a year and a half is too many you should keep in mind that if you have money at risk you should be running the charts six days a week. You can rest on the seventh.

The first case study of SPB for Laurie found the shares trading for $11.99 and  the discussion was centered on the sanctity of the dividend and the growth possibilities for the company. It was advised that the dividend yield of over 13% was rich and had to reflect increased risk of a cut. The established downtrend and no evidence of a reversal put a caution flag on the track for buy and hold investors.

The last time the risks and opportunities associated with the company were evaluated was on September 28, 2011. The shares closed at $9.23 and it was suggested that SPB was not suitable for seniors looking for income. Unfortunately a subsequent cut in the dividend made that the right call. The stock hit a 52 week low of  $5.21 on November 30, 2011. Once we get the shares up on the lift we will have a better idea of what their prospects might be as we go deeper into 2012.

 

The three-year chart is a mixed bag depending on when you got involved with the company. If you were a buyer anytime between January of 2010 and December of 2011 its not a pretty picture. If you were a buyer in the last two weeks its steak and mushrooms time! What is evident at this point is that after a healthy advance since the release of Q4 results on February 16, 2012 the stock has met resistance along the 200-day moving average.  The question that arises is if SPB has more in it.

 

 

 

 

 

The RSI on the six-month chart indicates that the stock is currently overbought and the MACD appears to be turning lower. You can’t discount the impact of Mr. Luc Desjardins, the new President and CEO, has had on the company. He has been addressing the debt issues at the company since he took the helm in November of 2011. However given that a warm winter will reduce volumes in the energy services division I remain cautious in my thinking on SPB. I expect a pull back from these levels and need more convincing that the company is back on a growth track.

 

Make it a profitable day and happy capitalism!

 

 

 

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