Could you examine Savaria for me?
Thanks for the assignment. This will be my first inspection of the case for Savaria Corporation (SIS TSX). The company operates in a specialized niche serving the needs of those with mobility issues. They design, engineer, and manufacture accessibility lifts, elevators, and wheelchair van conversions. The company has enjoyed a five year annual revenue growth rate of 8.5% as they have benefited from a number of macro-trends. The drivers include an aging population, the desire to age at home, and high obesity rates.
The company earns 84% of its revenue from its lift and elevator segment with the remaining 16% attributed to their vehicle unit. Geographically 54% of revenue comes from the United States, 37% from Canada, and 9% internationally. The market capitalization is $281.88 million which would place it in the small cap section of your portfolio. The dividend yield is 2.5% so the asset produces tax favourable income.
A scan of the charts will inform my thoughts on this investment.
The three-year chart depicts a stock that has been on a run that started in 2013 when it traded below $2.00. There are a lot of good patterns that are worth mentioning. The first is that the advance has enjoyed support along the 50 and 200-day moving averages. The stock built a base near $5.00 in from August to December of 2015 before taking off in February of 2016. SIS touched a 52-week high of $9.00 in late May and has been pulling back
The six-month chart highlights the move up and through the 50 and 200-day moving averages in February as the MACD and the RSI generated buy signals. The golden cross that formed in March when SIS was trading near $6.25 informed investors that there was more gas in the tank. The shares were overbought for most of April and May before the retreat from the 52-week high.
At the moment the stock is retesting support along the 50-day moving average with no indications that we can expect a new leg up in the near term. I would say that this pony has run hard and is now taking a breather. I would suggest accumulating SIS, collecting the dividend, and letting the demographics work for you.
Next time I will undertake an assignment from Laura to find a way to take advantage of the coming legalization of weed.
Make it a profitable day and happy capitalism!