Pengrowth Energy Corp. caught a bounce that has lost momentum

Mar 27th, 2013 – Comment

Currently the momentum indicators are still suggesting continued selling pressure.


About the Author

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.


Read the author's full profile.


Further Research

Read more about Energy.


 

Hey Lou,

Whats your take on PGF-TSX ?

Thanks,

Nick

 

Hey Nick,

 

Thanks for the assignment. This will be the fourth time since June of 2012 that I have examined the case for Pengrowth Energy Corp. (PGF TSX). The second time an investigation was conducted was in November of 2012 when the shares were trading at $5.53. John wanted know if the stock had hit bottom. The research done on his behalf indicated that PGF would most likely have to retest the 1992 lows at $4.50 and that it would be prudent to wait for a trend reversal.

The last analysis was posted on January 30, 2013 on behalf of Doug who could not believe how the stock continued to go down. The shares were trading at $4.44 having broken below support at $4.50 and the MACD and RSI were indicating that momentum was favouring sellers. Unfortunately the selling continued unabated until late February where the shares caught a bounce off of  a 52 -week low of $3.93.

The move off of $3.93 came as natural gas prices caught a lift and the company reported a 55%  increase in their proven and probable reserves. Another run at the charts will better inform my comments on the stock.

 

 

 

The three-year chart illustrates the long decline to the 52-week low of $3.93 on February 26, 2013 where the stock caught a bounce to $5.75. The advance met resistance along the 200-day moving average and proceeded to pulled back. The silver lining in this dark cloud is that at least the relentless selling has abated. It is not yet clear that the a new sustained uptrend has started but hope springs eternal in the heart of investors.

 

 

 

 

 

The six-month chart indicates that the RSI and MACD both signalled a buy off the February lows and then a sell as the shares hit resistance along the 200-day moving average in mid March. If you had caught the ride bottom to top you would have realized a 46.3% capital gain in just over two weeks.  Currently the momentum indicators are still suggesting continued selling pressure.

The best approach to take with PGF is to watch for support at $5.00 and a shift in the MACD and RSI indicating the buyers have taken control of the market. I like the improved price of natural gas and the increased reserves reported by the company. The 9.09% dividend yield is also attractive but being pretty just isn’t enough!

Make it profitable day and happy capitalism!

Categories: Energy
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media