Wondered what your thoughts are for this company. Have owned it for a while, through the split year, and wondered where it’s future lies.
Appreciate your comment.
Thanks for the assignment. This will be the first time that I explore the issues that surround Algoma Central Corporation. (ALC TSX).
The company owns and operates a fleet of dry and liquid bulk carriers that ply the trade on the Great Lakes. Unfortunately the decline in commodity prices has had an adverse effect on the demand for transportation services from natural resources companies.
Coal shipments on the Great Lakes were off 41% last year and in the face of slack demand ALC recently announced that it would be retiring five ships earlier than expected. Other factors to consider is that ALC is a thin trader with a market cap of $484 million and a dividend yield of 2.25%.
A review of the charts will provide additional information for your evaluation.
The three-year chart indicates that the shares of ALC had enjoyed a nice advance that came to an abrupt end in August of 2015 when it topped out at its 52-week high of $17.60. By the end of August the stock had broken below the 50 and 200-day moving averages followed by a death cross that formed in late September.
Also worth noting is the resistance along the 50-day moving average all along the decline.
The six-month chart highlights the buy signal generated by the MACD and the RSI in January of 2016 followed by the sell signal in late February. At the moment there is little to indicate a reversal of the downtrend.
Until the demand for coal, iron, and other bulk commodities improves its not likely that we should expect buyers to bid up the price of the shares.
ALC is suffering with its clients and as I have observed over the course of a lifetime when your clients are hurting – you hurt worse!
Next time I will re-examine the situation at Canadian Western Bank (CWB TSX) on a request from Zenon.
Make it a profitable day and happy capitalism!