Parkland Fuel Corp. taking a breather

Sep 5th, 2012 – Comment

At this point there is nothing to suggest that the shares are about to begin a new uptrend.


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Hi Lou,

Back in March, you told me that Parkland Fuel would most likely hit $17. It sure did!
Do you think the run is done or do you think there is more upside?
My average cost is $12.55, should I be taking a little profit off the table?
Your feedback is very appreciated.

Thank you very much,

David

 

Hey David,

The last time I looked at Parkland Fuel Corp. (PKI TSX) for you was on March 19, 2011 when it was trading at $13.77. Your average cost of $12.55 indicates that as of the close of trading September 04, 2012 you are sitting on a 33% capital gain in addition to the dividends you have collected. Not too shabby! Currently the dividend yield is 6.12% while back in March it was 7.4% reflecting the appreciation of the shares. The Q2 results released on August 9, 2012  ignited a fire under the shares as earnings were significantly above the forecast.

You wanted to know if you should continue to hold or take profits off of the table. The challenge to an advance beyond the $17.00 range is the fact that it is close to the all time high. Investors tend to sell near record highs because of a lack of evidence that the good times can continue to roll. The pull back in late August is evidence of prudent calendar management. The next flex point for PKI is the release of Q3 results in November. Make sure to survey the data stream for the exact date of the release and track market reaction as we go through the next three months.

Another review of the charts will provide further evidence to assist you with your decision.

 

 

 

The three – year chart depicts the advance that took off in the spring of 2012 and the resistance that came in at the 52 week high of $17.21 in August. The MACD and the RSI both signalled the shift in momentum towards the sell side in the same time period. The move up after the release of Q2 was fairly aggressive and has not built a lot of support. There is a thin ledge of support at $16.00 but if the stock continues the current retreat it may have to retest support further down at $15.00.

 

 

 

 

 

 

The six-month chart provides a close-up of the August pullback. The MACD and RSI both indicated the advance was getting ahead of itself and needed to take a breather. At this point there is nothing to suggest that the shares are about to begin a new uptrend. If you are a conservative investor you should consider taking a profit and buying back at lower prices once we get an indication that the selling has stopped.

 

Make it a profitable day and happy capitalism!

 

 

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