Astra Technologies Ltd. may not fit the needs of a new investor

Oct 16th, 2013 – Comment

In the last 30 days the shares have been trading significantly below the average daily volume.


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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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Hi,
I am a new investor and looking for some input since my understanding needs to develop. Is AAH a good investment? Also, is there anywhere I can learn more about how to read information given by analysts which is explained in lay man’s terms.

Thanks for your help,
Armaiti

 

Hey Armaiti,

Congratulations on your desire to grow your wealth and  improve your financial literacy. As a new investor I would generally suggest you consider an exchange traded fund or a mutual fund as a place to begin growing your assets.  An exchange traded fund offers an ownership interest in a diversified portfolio of stocks or bonds that model an existing index. Mutual funds offer an ownership interest in a diversified portfolio of stocks or bonds plus professional active management of the assets.

In terms of a good resource to begin your study of the investment universe I would recommend the ” Investing for Dummies” series of books which you can find at most book stores and libraries. What you will find is that the study and understanding of the investments is a life long undertaking. There is always something new to learn.

With regards to Aastra Technologies Ltd. (AAH TSX) an examination of the charts will help determine how best to proceed.

 

AAH

The three- year chart provides an example of a cup and handle pattern that started in May of 2012 and concluded in late April of 2013 when the stock began its most recent advance to a 52-week high of $22.01 on September 23, 2013.  A cup and handle pattern is a bullish continuation pattern indicating that there are more gains to be had.

 

 

 

 

 

 

Cup_and_Handle

Here is an example of a cup and handle pattern to help you better identify the next opportunity should  you come across it.

 

 

 

 

 

 

 

AAH2

The six-month chart depicts the gap up in July as the company announced that the board of directors had approved a special dividend of $7.50 a share. Currently the stock is meeting resistance at $22.00 since September.

As a new investor you also need to pay attention to a companies earnings calendar. AAH is scheduled to report its Q3 results on October 17, 2013 which will provide investors with a host of new information that will need to be evaluated. Other factors that you need to understand is the risk associated with a company that has a small market capitalization and somewhat thin trading volume. AAH has a market cap of $238 million and average daily volume over the last three months of 18,108 shares. In the last 30 days the shares have been trading significantly below the average daily volume.

Finally the MACD and the RSI are not generating a buy signal which puts another caution flag on the track for the time being.

The research conducted on your behalf suggests that the characteristics of this case may be beyond your current risk profile, given the small market capitalization, thin trading volume, lack of a buy signal generated by the MACD and RSI, and the release of Q3 data in less than a day.

 

Make it a profitable day and happy capitalism!

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