Please take a look at PRY. It’s a smaller Oil & Gas stock that has moved up this fall on very strong insider buying. Unlike a lot of similar stocks this one shows steady earnings and a strong Return on Equity but does not appear to have much of an analyst following. I would appreciate your opinion.
Thanks for the assignment. This will be the second time that I examine the case for Pinecrest Energy Inc (PRY TSXV) on your behalf. The first was on October 2, 2013 when the shares were trading for $0.51. The research conducted at that time indicated that the stock had been struggling with a downtrend that started in February of 2012 when the stock was trading close to $3.50. The charts indicated that a death cross had formed in May of 2012 when the shares were trading for $2.25 alerting the astute investor that it would be wise to get out while the getting was good.
As the stock ground its way down to a rock bottom in September of 2013 the MACD and the RSI both signalled a buy taking the shares to a high near $0.60 by late in the month. However the shares began to pull back and were testing support along the 50-day moving average. It was advised that traders were taking profits and that PRY needed to hold support along the 50-day moving average before making a buy.
You ask why there isn’t much of a following for the stock amongst analyst to which I recommend that you examine the company website where they list research coverage from eleven firms. Another examination of the charts will inform my opinion.
The three- year chart depicts a stock that is still in the grips of a downtrend. What is also evident is that the MACD and RSI signalled the retreat from resistance near $0.60 at the end of September and have yet to indicate that the selling is about to stop. Finally the shares have breached support along the 50-day moving average which adds another level of concern for those watching their trading profits slip away.
The six-month chart provides a close up of the trading action since September. In the last two months the stock has settled into a down channel with a series of lower highs and lower lows as it retreated from $0.60 to $0.48. The momentum indicators are not suggesting a trend reversal which you need to add to your consideration.
It is apparent that you have an interest in this stock and are watching it closely. However I would advise that you may want to stop fighting the tape. You have mentioned a number of factors that you believe are positive for the stock and yet its not showing up in the stock price. Keep in mind that PRY is a higher risk investment and that wanting it to go up won’t necessarily make it happen.
Make it a profitable day and happy capitalism!