Atlantic Power Corporation not a buy

Mar 14th, 2016 – 1 Comment

Volatile trader over the last three years


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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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ATLANTIC POWER CORPORATION LOGO

Hey Lou

Been looking at Atlantic Power – on the upswing, have wrestled their debt down some, any thoughts?

Bob

 

Hey Bob,

Thanks for the assignment. This will be the fourth time since 2012 that I examine the charts for Atlantic Power Corporation (ATP TSX). The last time was on March 13, 2013 on a request from Michael. The shares were trading for $5.73 and he thought they were undervalued.

ATP had suffered a big sell off on the announcement that management had decided to cut the dividend. The stock was just coming out of an extremely oversold situation but it was advised to focus on risk management. The company was expecting to report losses for two quarters and it was the defendant in a class action lawsuits.

In hindsight that was the right call. ATP continued to retreat hitting $2.61 by February of 2014.

Another inspection of the charts will help determine if the current advance has legs.

 

ATP

The three-year chart tells the tale of a stock that has experienced a very rocky pattern which has   offered little for the buy and hold investor except for the 4.29% dividend yield.

The advance that caught your eye came on the back of the release of Q4 and fiscal year 2015 results on March 7, 2016. What is also evident is the resistance along the 200-day moving average that will have to be overcome if ATP is going to continue to move higher.

 

 

ATP2

The six-month chart pulls focus on the buy signals generated by the MACD and the RSI before the release of the company’s financial results. The chart also highlights the resistance along the 200-day moving average.

The average daily volume over the last three months is 108,703 shares a day and the market cap is $340.55 million. These factors in addition to the trend and resistance should put ATP in the speculative portion of your portfolio.

From the research conducted there isn’t enough evidence to support a buy at this time.

Next time I will audit the charts of Enbridge Inc. (ENB TSX) for Cam.

Make it a profitable day and happy capitalism!

 

Categories: Utilities
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