Always enjoy your columns. Cogeco Cable is on a tear. Keep it or sell some of my shares for a profit. Shaw Communications is on a roll as well. Why is this sector hot?
Is it people/institutions selling their oil/ gas losers and finding a hot sector?
Thanks for the assignment! Happy to hear that you are making use of the studies. I will examine Cogeco Cable Inc. (CCA TSX) today and Shaw Communications Inc. (SJR.B TSX) on Friday January 23, 2015. Cogeco Cable is a cable television operator offering basic able plus, pay TV, audio programming, and high speed internet. The company may also benefit from the Canadian Radio Television Commission’s push to open competition in major wireless markets.
CCA been on a run since July of 2012 when it caught a bounce off of a rock bottom at $32.50. The stock has realized higher valuations as the multiple has expanded on the strength of earnings and dividend growth. Given that the shares have been on a run for over two years I don’t think that the move higher that started in November can be attributed to oil industry investors looking for a safe haven.
An inspection of the charts will offer another measure to help you in your decision to buy, sell, or hold.
The three-year chart is a nice example of a wealth creating advance. The move higher started in July of 2012 and by late October investors saw the shares move above the 50-day moving average. By mid January of 2013 CCA broke above the 200-day moving average and a golden cross surfaced in early February. From there it was a matter of counting profits.
There were a couple of tests of support along the 200-day moving average over the course of the last two years but courageous investors who stepped up and bought on the dips were well rewarded. The move higher that started in early November of 2014 was foreshadowed by the buy signals generated by the MACD and the RSI. Concurrently in November CCA reported quarterly results that beat the street.
The six-month chart provides a close-up of the buy signals generated by the MACD and the RSI in mid October as the stock bounced off $55.50 on its way to the 52-week high of $76.08. At this point I wouldn’t shoot this running horse but would recommend develop a trading strategy where you raise cash at the top so you can add to your core position on pullbacks.
Make it a profitable day and happy capitalism!