Pacific & Western Bank of Canada a choppy and thin trader

Mar 4th, 2016 – 1 Comment

Great story – not such great charts


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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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PWB LOGO

Hello Lou Schizas,

I read your analysis regarding  PWB-T. I am quite interested to this stock.
You think PWB-T is not worthy to be bought because of his business model. Actually, do you know anything about the company’s other details? For example, bad debts, or client type?

Song

 

 

 

Hey Song,

Thanks for the assignment. This will be the second time that I inspect the prospects for Pacific & Western Bank of Canada (PWB TSX). The last was on September 18, 2015. Steve invited my thoughts and described PWB as a real dog in his portfolio.

The shares were trading for $4.63 and had been labouring under a downtrend since October of 2013. In addition a death cross had formed in June of 2015.  The stock hit a 52-week low of $4.40 in September of 2015 and the evidence at hand was not pointing to a reversal of the downtrend.

The research indicated that a review of the thesis for the investment was called for in light of several factors. These included the established downtrend, the death cross, the thin average daily trading volume,and the low market capitalization.

Your question about loan loss provisions and client profiles are not factors that I specifically investigate. However the basic premise of technical analysis is that in the price there is much knowledge. The price of the stock reflects all the factors in play at the moment the snapshot is taken.

Another audit of the charts will add depth as you decide how to proceed with this stock.

 

PWB

The three-year chart depicts a stock that continues to trade under the influence of an established downtrend and a death cross. The stock did catch a bounce off the 52-week low of $4.07 and ran to $5.80 by the end of December of 2015. But that was as good as it got.

 

 

 

 

 

PWB2

The six-month chart provides a close-up of the advance that started in early October as the MACD and the RSI both generated buy signals. As we entered 2016 it didn’t take very long for PWB to give up most of the gains.

This is the type of stock that can offer rewards but you have to mind the choppy and thin trading. PWB is not a buy and hold stock.

 

 

Next time I will explore the situation at Emerson Electric Co. (EMR NYSE) for Mike.

 

Make it a profitable day and happy capitalism!

 

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