EnerCare Inc. a case of buy high sell higher

Nov 5th, 2014 – Comment

At the moment the MACD and the RSI appear to be turning lower indicating that we could see a pullback in the short term as the stock has met resistance at $15.00.


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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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ECI LOGO

Hi Lou,

I listen to your reports on AM 640 both on the way to and from work. Did I hear correctly that you would do an evaluation of a company? If so, can you tell me about EnerCare Inc.?

Thanks,

Tina

 

 

 

 

Hey Tina,

Thanks for the assignment and for listening to AM640. You heard me correctly. I have been conducting research on behalf of readers, listeners, and viewers for fifteen years as a means of stimulating conversations with investors who are looking for input on their portfolios. The upside for me and other investors is that its an idea generator. I get to examine the case for a stock and share that with interested market participants.

EnerCare Inc. (ECI TSX) provides residential and commercial services through the rental of water heaters, furnaces, air conditioners, and other HVAC rental products. The company serves 1.1 million customer in a variety of locations in Canada.

On July 24, 2014 ECI bought Direct Energy’s home and small commercial services business for $550 million with the deal closing in on October 20, 2014. The transaction provided for a consolidation of the market and the opportunity to create a countrywide home services provider.

The company offers a dividend that yields 4.9% and will report its Q3 results on November 13, 2014.

An inspection of the charts will help identify the trend, support, and resistance associated with this stock.

 

ECI

The three-year chart tells the tale of a sweet advance that started in January of 2013 as the stock caught a bounce off of the base it had built at $7.00. The MACD and the RSI both generated buy signals at the same time just as the shares broke above the 50 and 200-day moving averages. By late February 2013 a golden cross surfaced indicating that the move higher had more in it.

What is also worth mentioning is the support along the 50-day moving average that has been tested over the last twenty three months but never seriously breached. The pace of the advance really picked up the pace in 2014 especially with the July $2.00 pop when the company responded to a letter from Augustus Advisors LLC indicating that a valuation of $13.50 to $15.00  a share was deemed insufficient. When the board of directors weighs and measures an offer it tells investors that a game is afoot.

 

 

 

 

 

ECI2

The six-month chart outlines the support along the 50-day moving average that ECI has enjoyed. When a stock tests support along the moving average it tells us that investors are willing to buy on a pullback. At the moment the MACD and the RSI appear to be turning lower indicating that we could see a pullback in the short term as the stock has met resistance at $15.00.

 

From the research conducted on your behalf it looks like you could start to accumulate ECI for your portfolio.

Make it a profitable day and happy capitalism!

 

 

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