Northland Power Inc. in a fight to hold support along the 200-day moving average

Oct 8th, 2014 – 1 Comment

One factor to consider is that the payout ratio for NPI is considered high and that has implications for dividend growth.


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Hi Lou,
Could you please comment on Northland Power. Do you see it as a buy right now,

Many thanks,
Jim.

 

 

 

Hey Jim,

Thanks for the assignment. is focused on the development of sustainable power generation.  The company operates twenty facilities in Canada and Europe that use natural gas, wind, solar and biomass. Existing facilities produce 1,335 megawatts with an addition 539 mw’s under construction. The composition of current power production includes 75% from thermal, 20% from wind, and 5% from solar. When an additional 2,500 mw of capacity in the pipeline and under construction are added the make up will 45% thermal, 45% wind, 5% water, and 5% solar.

The growth in wind capacity will arise from the company’s investments in two offshore wind projects in Europe. The Gemini project in the North Sea off the coast of the Netherlands and the Nordsee facility offshore Germany will add 900 mw of capacity when completed. The company will not only reap new capacity with the investments but also institutional expertise which they can then apply to opportunities in North America when roadblocks to offshore turbines are overcome.

Scrutinizing the charts will help you decide if now is a good time to take a position in NPI.

 

 

NPI

The three-year chart indicates that the leg up that started in December of 2013 when the shares caught a lift off support at $14.50 came to a halt in late June of 2014 as the stock topped out close to $18.50. What has transpired since then is a new downtrend establishing itself with the stock just barely holding support along the 200-day moving average. In late August the MACD and the RSI generated a sell signal when the shares were trading just above $18.00.

 

 

 

 

 

 

 

NPI2

The six-month chart provides an enhanced view of the sell signals generated by the MACD and the RSI in late August- early September. What is also evident is the resistance that has formed along the 50-day moving average and the support along the 200-day moving average. There are no signs that we can anticipate a trend reversal in the short term.

One factor to consider is that the payout ratio for NPI is considered high and that has implications for dividend growth. If you are really married to this story and have an appetite for risk then take an initial position at these levels and add or reduce your holdings as the situation dictates.

Make it a profitable day and happy capitalism!

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