The North West Company Inc. offers income and growth

May 4th, 2015 – Comment

From the evidence provided I would reiterate the analysis from 2009.


About the Author

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.


Read the author's full profile.


Further Research

Read more about Grocery.


NWC LOGO

Dear Lou,

Bought NWC about a month ago.. Seems to be heading in the wrong direction. Is there something I should know about it & why it’s not performing. Would appreciate your views on this seemingly well rated company.

Wayne

 

Hey Wayne,

Thanks for the assignment. This will be the second time that I examine the case for The North West Company Inc. (NWC TSX). The last time was on June 29, 2009 when the units were trading for $15.16 and the assets were organized as an income trust.  Morton was attracted to the 8.9% yield on distributions and wanted to know if the units were worth holding and if he should buy more. The research conducted six years ago pointed to trust units that had been selling off in response to the 2008 financial crisis . It was advised to establish a core position and use another allocation of capital to trade in the established range while waiting for a breakout and enjoying the yield.

Retrospectively that was the right call. NWC converted to a dividend paying corporation, as did most of the refugees who straggled out of the Halloween Massacre of 2006, and provided investors with income and growth. A look under the bonnet will help identify what we might expect from NWC in terms of trend, support, and resistance.

 

NWC

The three-year chart indicates that you may have been a buyer near $26.00 and are now concerned about the pullback to the current trading range. Taking a look at the trading pattern since the beginning of 2015 you can see that $26.00 has been providing resistance over multiple attempts to move higher. What is also worth noticing is a slight downtrend that has been established over the same time period. We also have to acknowledge the break below the 50-day moving average and the test of support at $24.50.

The MACD and the RSI provided buy signals in November of 2014 as the shares came off support near $22.00 and made a run to the 52-week high of $26.80 by late January of 2015.

 

 

 

 

 

 

 

NWC2

The six-month chart depicts the sell signal generated by the MACD and the RSI in early February and the meandering retreat over the last four months. I don’t see this as anything other than a pullback as investors await the release of earnings in June. From the evidence provided I would reiterate the analysis from 2009. If you like the story and the 4.66 dividend yield establish a core position and use another allocation of capital to trade the stock for profit.

 

Next time I will examine Evertz Technologies Ltd. (ET TSX) for Pat.

 

Make it a profitable day and happy capitalism!

 

Categories: Grocery
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media