Chartwell Retirement Residences an accumulate

Jul 18th, 2014 – Comment

The MACD and the RIS on the six-month chart are starting to move up suggesting that buyers are moving back into the market.


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CHS.UN LOGO

Hello Lou,
I enjoy your AM640 comments and reports.
Great job!
I’m preparing to purchase shares of Chartwell Retirement Residences on TSX.
What are your thoughts regarding this pending trade?
By the way, I have a position in Service Corporation International SCI-NYSE .
Obviously, I realize the timely importance of exposure to both the death care industry as well as the senior care sector.
Thanks in advance.
Best,
Steve
Toronto

 

Hey Steve,

Thanks for your kind words they are very much appreciated. It has been my pleasure to serve AM640 listeners since 2001 and I am glad you enjoy the segments.

I will investigate Chartwell Retirement Residences ( CSH.UN TSX) today and Service Corporation International (SCI NYSE) on Monday. CSH.UN is an open ended trust that indirectly owns and operates a complete range of seniors housing communities. They have 181 facilities in Canada and 39 in the United States. Management seeks growth through targeted acquisitions in what is seen as a fragmented market. The trust offers monthly distributions that yield 5.01%.

An examination of the charts will help inform my opinion on your trade.

 

CSH.UN

The three-year chart indicates that the units started a profitable advance after pulling back in August of 2013. The MACD and the RSI both generated a series of buy and sell signals over the course of the last eleven months. Worth noting is the golden cross that formed in January of 2014 and the intact uptrend line that is in place.

 

 

 

 

 

CSH.UN2

The MACD and the RSI on the six-month chart are starting to move up suggesting that buyers are moving back into the market. What is also evident is that support in the $10.60 range held. From a trend perspective we should expect continued demand for seniors residences given the demographics in play.

What you should keep in mind is that these facilities are a last resort for most seniors. The decision to abandon independent living is usually motivated by circumstance more often than choice. In the industry the average for a first time resident is typically an individual between their late seventies and early eighties.  What that also suggests is that the average tenure is limited.

From the research conducted on your behalf it looks like CSH.UN would be a good stock to accumulate for the distributions and capital appreciation over a longer investment horizon.

Make it a profitable day and happy capitalism!

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