I would much appreciate getting your analysis on First National Financial.
Many thanks and regards,
Thanks for the assignment! First National Financial Corporation (FN TSX) is Canada’s largest non-bank lender. They focus on originating and underwriting residential and commercial mortgages and have $77 billion in mortgages under administration. The company has developed the Merlin Mortgage Application system to serve the mortgage broker channel. On July 16, 2014 the company closed a deal to provide a customized version of Merlin to Toronto- Dominion Bank to improve their deal flow through the broker channel. Its always a good thing when a company can earn income from systems developed in-house .
A probe of the charts will help identify how best to proceed with the shares of FN.
The three-year chart provides the outline of a stock that had been oscillating in a gentle up channel that began in October of 2011 and ran until August of 2013. As the shares broke above the upper resistance line of the channel they then began a more robust uptrend taking the price from $18.00 in late September of 2013 to a high just above $25.00 by February of 2014.
The stock has pulled back starting in April of 2014 but maintained support along the 200-day moving average. Make note of the symmetrical triangle that has formed since April. A symmetrical triangle is a continuation pattern which indicates that the shares have consolidated and that there is buying pressure building to send the stock higher.
The MACD and the RSI on the six-month chart signalled a buy in late March as the shares of FN were oversold. The momentum generators produced another buy signal in late June as the stock bounced off the 200-day moving average.
The next flex point for FN will come on July 29, 2014 when the company reports its Q2 results. With the symmetrical triangle in play and a dividend yield of 6.47% FN offers a reasonable opportunity for a profitable trade.
Make it a profitable day and happy capitalism!