Your thoughts on the May 14 financial results from H2O innovation.
Thanks for the assignment. H2O Innovation Inc. (HEO TSXV) provides water and waste water treatment systems utilizing membrane filtration. The company also offers its customers two consumables, specialty chemicals, and stainless steel couplings. In addition HEO has a specialty business providing equipment to maple farms. The drought that has devastated California has been driving demand for solutions and certainly recycling of waste water offers some relief.
The third quarter results announced on May 14, 2015 revealed a growing top line which translated to positive net income as opposed to the loss reported a year earlier. But keep in mind that the net income of $150,490 has to be seen as good but needing improvement. Other factors to consider are the average volume over the last thirty days of 25,228 shares and the $30.97 million market capitalization. These issues should put the stock into the speculative portion of your portfolio.
An inspection of the charts will add to your evaluation of HEO.
The three-year chart indicates that the shares have been struggling with a downtrend since March of 2014. What is also evident is that attempts to move higher have been meeting resistance along the 50 and 200-day moving averages. The chart also illustrates the thin and choppy trading that has been a consistent pattern for this stock.
The six-month chart provides a close- up of the resistance along the moving averages that have stalled multiple advances. The release of Q3 results did help the shares move above the 50-day moving average in May but they are now meeting resistance along the 200-day moving average. The MACD and the RSI generated buy signals in early May but have since turned lower as HEO retreated from the spike near $1.55.
HEO is a micro cap stock with thin volume and meeting resistance along its downtrend line and its moving averages. None of which are pointing to a trend reversal. The next quarterly report is scheduled for September so it might be wise to monitor HEO as it approaches the flex point.
Next time I will inspect the charts for Inter Pipeline Ltd. (IPL TSX) for Douglas and Irene.
Make it a profitable day and happy capitalism!