I am considering purchasing shares in Crescent point energy or Cardinal energy for my tax free account. Do you think both are good choices or is one better than another. Your thoughts would be appreciated.
Thanks for the assignment. I will investigate the case for Crescent Point Energy Corp.(CPG TSX) today and next time I will look at the case for Cardinal Energy Ltd. (CJ TSX).This will be the seventh time since 2010 that I inspect the charts for CPG.
The last was on July 16, 2015 when the shares were trading for $22.80 and the dividend yield was 12.11%. Debbie was attracted to the dividend,had bought in at $29.75, and wanted to know if she should buy more to average down. Regular readers will know that I don’t recommend buying more as a stock is selling off. The best time to average in is when a stock is moving up.
The research indicated that there was an established downtrend in place since June of 2014. In addition the MACD and the RSI were providing evidence that sellers were in control of the market. It was advised that Debbie not add to her position at that time.
Retrospectively that was the right call as CPG hit a 52-week low of $11.31 in August of 2015 when the company cut its dividend by 57% in the face of weak energy prices. It was the first time the company cut its dividend in fourteen years.
Another check of the charts will provide the substance of my analysis.
The three-year chart indicates that the stock is still dealing with an established downtrend but did catch a bounce off the 52-week low. The MACD and the RSI both generated buy signals as the shares were severely oversold after the dividend cut. Currently the dividend yield is 6.50%.
The six-month chart highlights the resistance that CPG ran into at $20.00 although those that caught the ride off the rock bottom enjoyed an attractive return over a couple of months. Currently the stock looks to be holding a thin ledge of support at $18.00.There is no evidence that we can expect a trend reversal at this time.
There is a period of seasonal strength in the energy sector that could add to the leg up that started in August. Expect resistance near $22.00 and then at $24.00.
Next time you can expect a workup on Cardinal Energy Ltd.(CJ TSX) to conclude the comparative analysis.
Make it a profitable day and happy capitalism!