International Forest Products Limited makes a case for booking profits

Feb 15th, 2013 – Comment

The stock price has also gotten ahead of its 50 and 200-day moving averages and has also failed to build much support along the advance.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Lou,
I enjoy reading your mailbag and was wondering if you could give me a report on IFP.A. I bought a 1,000 shares at 6.74 for short term growth on the US housing market. Just wondering what your analysis might show. Is there still good upside or is it time to take profits.

Thanks

Tbone

 

Hey Tbone,

Thanks for the assignment and your kind words. International Forest Products Limited (IFP.A TSX) has had quite the run since November 28, 2011 when it traded at  $1.40. The move higher was prompted by encouraging signs in the U.S. housing market as demand drove housing starts out of the hole created by the financial crisis. Whenever I get a question as to whether it is time to take profits my answer is go with your gut. Once you throw to cash you can make another decision. Getting caught on the horns of uncertainty is not a good place for you or your money. You are in profit and want to protect your  40% gain- so do it. Gains that you capture are far better than gains that slip away. If the stock continues to run you can get back on the ride with a clear head.

A review of the charts will add texture to your decision on how best to manage your investment.

 

The three-year chart depicts the lift that took the stock from $4.50 in July of 2012 to its current price of $9.45. Over the last thirty days of trading volume has only been above the three month daily average of 259,062 shares a day eight times which puts a caution flag on the track for me. The stock price has also gotten ahead of its 50 and 200-day moving averages and has also failed to build much support along the advance. All of which may be why you are questioning the potential for further gains.

 

 

 

 

 

The six-month chart provides a close- up of the gap between the current price and the 200-day moving average. Generally I like a smaller gap between the two. The RSI is already sticking its nose in overbought territory and the MACD has turned up without much conviction. With the evidence at hand I would suggest that you take a profit.

 

Make it a profitable day and happy capitalism!

Categories: Forestry
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