SNC Lavalin Group Inc. moving off its 52 week low

Nov 26th, 2012 – Comment

As to your question I would say that now is not the time to sell.


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Hi Lou.

I would like your opinion on SNC. Is it worth hanging onto?

I’ve had the shares for a long time in my RRSP.

Thanks

Irma

 

Hey Irma,

Thanks for the assignment. This will be the second time I run the charts for SNC Lavalin Group Inc. (SNC TSX) in 2012. I first examined the case on July 18 when the shares were trading at $39.80. Susan wanted my opinion in light of the bribery allegations that hit the company and led to the resignation or termination of a number of executives. At the time it was observed that the stock was trying to build a base along $38.00 and that there was longer term support at $36.00. Based on the snapshot taken on that day it was advised that there was nothing on the charts suggesting a buy. In early August the shares hit resistance at $40.00 and began a retreat to the 52 week low of $34.36 on September 4.

There has been a recovery from the September lows which provides a good point of departure for another analysis of these shares.

 

 

 

The three- year chart depicts the downtrend that has dominated the chart since early 2011. There has been a recovery in the last three months which begs the question of sustainability of the advance. A golden cross has surfaced which is a positive indicator but that alone doesn’t make SNC a buy. The struggle with resistance at $42.00 during the month of November requires watching. Above $42.00 there is resistance at $44.00 and again at $46.00.

 

 

 

 

 

 

The six-month chart illustrates the buy signal generated by the MACD and the RSI in September. Both momentum indicators also signalled the pull back from the overbought situation in early November as the stock hit $43.00 and then ran out of gas. As to your question I would say that now is not the time to sell. I don’t know at what price you were a buyer of SNC but there has been a recovery from the lows. However it does call into question how you manage your holdings. The shares of SNC have been in a decline for close to two years when they were trading at close to $60.00. The dividend yield of 2.118% is better than the bank rate but not at the expense of surrendering close to 50%  of your assets.

What I would recommend is decidedly more active monitoring of your holdings. If you ignore your money it will go away!

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