AirBoss of America Corp pulling back from a 52-week high

Jan 30th, 2015 – Comment

The next flex point for the shares will come in mid March when the company releases its quarterly results.


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BOS LOGO

Lou,
With fuel price down, it looks like manufacturers in Ontario may start doing well again. I have recently been looking at AirBoss. I am wondering about the underlying business model and strength of the company in the longer term.

Thanks
Cheryl

 

Hey Cheryl,

 

Thanks for the assignment. AirBoss of America Corp. (BOS TSX) develops and manufactures propriety rubber based products. Their clients are found in the transportation, defence, and industrial sectors. There are two main contributors to revenue generation. Compounding, which is the use of expertise in chemistry to create customized rubber products, contributes 44% total annual revenue. Flexible products such as anti-vibration and noise reduction parts for the auto industry represent 41% of revenue. The remaining 15% of revenue comes from industrial products with 9% and defence with 6%.

The research indicates that some of the analyst that follow BOS expect 2015  and 2016 to be a breakout years in terms of revenue and earnings growth.

When I examined the charts for BOS it was apparent that the stock didn’t need a drop in oil prices to mount up and ride to the top of the ridge. The shares have enjoyed a profitable advance that started with the formation of a golden cross in January of 2013. The question that remains is if the move higher has more in it.

A survey of the charts will provide added context to your consideration.

 

BOS

The three-year chart has a number of positive patterns worth examining. The first is the support along the 50 and 200-day moving averages as the shares moved higher. The MACD and the RSI generated buy signals in May of 2014 and in October of 2014 that led to higher highs. The leg up that started in October has been aggressive taking the stock to a 52-week high of $14.75.  However since reaching the high the shares have been pulling back.

 

 

 

 

 

 

 

BOS2

The MACD and the RSI on the  six-month chart are indicating that BOS has been overbought and may have to retest support at $13.50 and if that doesn’t hold perhaps down to $13.00. The next flex point for the shares will come in mid March when the company releases its quarterly results. It would be prudent to wait for the pullback to play itself out. There is no evidence that we should expect a reversal of the uptrend.

Make it a profitable day and happy capitalism!

 

 

 

Categories: Rubber Compounding
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