Veresen Inc. not a buy despite a 13.81% dividend yield

Feb 26th, 2016 – Comment

Dealing with a brutal selloff


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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.


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VSN LOGO

Today I will explore the factors surrounding Veresen Inc. (VSN TSX) to conclude the assignment from Angelo. This will be third time since 2012 that I analyze this stock.

The last time was on May 3, 2013. The shares were trading for $13.37 and Manuel wanted some updated information. The research indicated that the stock had bounced off a 52-week low at $11.22 as the MACD and the RSI generated buy signals. There was a golden cross in place and the momentum indicators were pointing to a continuation of the advance.

There was sufficient evidence in place to support a buy and it was advised that VSN was an example of buying high and selling higher. In retrospect that was the right call. The stock ran to over $17.00 by June of 2014 however that was the end of a profitable run.

Another inspection of the charts will provided a technical dimension to the evaluation of this stock.

VSN

The three-year chart illustrates the decline that started in May of 2015 as the shares came off a 52-week high of $19.40. In April the MACD and the RSI generated sell signals as the stock had become overbought. A death cross formed in late July of 2015 as the shares breached support near $14.00.

What has transpired since then has been a continuing series of lower highs and lower lows. Also visible on the chart is the established downtrend and resistance along the 50-day moving average.

 

 

VSN2

The six-month chart provides a close-up of the decline and the resistance along the 50-day moving average. Sadly there is a dearth of evidence to support a buy at this time.

What surfaced in my research is that VSN is up to their eyeballs in their Jordan Cove LNG Terminal project. There are still lots of things that have to happen to make the project a success so it would be prudent to regularly monitor how things are progressing.

Next time I will audit the case for Groupon Inc. (GRPN Nasdaq) for JV.

 

Make it a profitable day and happy capitalism!

Categories: pipelines
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