5N Plus Inc. pulling back from a 52-week high

Aug 22nd, 2016 – 1 Comment

A speculative investment


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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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Today’s examination of 5N Plus Inc. (VNP TSX) takes a look at one of the suppliers of cadmium telluride to the solar cell industry. The material is a semiconductor that enables the efficient conversion of solar energy into electricity.

Earlier in the company’s history sales to the solar industry dominated their income statement. A strategic acquisition diversified VNP’s business taking solar sales down below 20%. The rub with this investment is that the turmoil in the resource sector has taken its toll on this and every other producer. This year has seen a rebound in commodity prices but they are not even close to their 2014 highs.

The market capitalization for VNP is $165.44 million and the average daily volume over the last three months is 49,818 shares. Both of these metrics indicate that this should be considered a speculative investment.

A survey of the charts will outline the situation as it pertains to this stock

 

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The three-year chart indicates that VNP endured a long decline that started in May of 2014 when the stock traded near $5.00. The breach of the 50-day moving average in June of 2014 was followed by a break below the 200-day moving average in August. The death cross that formed in September signalled that investors could expect sellers to continue controlling the market.

The decline took the shares to a low of $0.92 by late July of 2015 and in November the stock caught a bounce off of support near $1.00. From there it  moved up and through the downtrend line in January of 2016.The new leg up took VNP to a 52-week high of $2.35 in June of this year but that was all it had in the tank.

Over the last two months the shares have pulled back from the highs and are now trading below the 50-day moving average.

 

 

 

 

 

 

 

 

 

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The six-month chart indicates that since the beginning of August the stock has failed to hold support near $2.00 and is now trying to hold support at $1.95. There are no patterns at this time pointing to a new leg up starting in the near future.

It would be best to monitor how the shares perform as we approach late September when oil producers are scheduled to meet and perhaps agree to freeze production. Higher oil prices will tend to drive demand for solar panels taking their suppliers with them.

Next time I’ll take a look at SunPower Corp. (SPWR NASDAQ)

 

Make it a profitable day and happy capitalism!

Categories: Solar Energy
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