Thanks for the assignment. I’ll concentrate my analysis on the common shares of Aimia Inc. ( AIM TSX). The company operates in the loyalty rewards industry with Aeroplan as their premier brand in Canada. The sector operates by selling points to companies who transfer them to their customers based on some metric and then buying the rewards that they will then render unto consumers redeeming their points.
When you look at Aeroplan for example AIM sells points to Air Canada (AC TSX) then buys close to $700 million a year in airfares from the airline in order to redeem points earned by plan members. The size of the purchases of airfares makes AIM one of Air Canada’s biggest customers.
The company has been cutting costs and staff since last year and has stated it expects to wring another $20 million out of its operations in 2016. Other challenges that need to be considered are lower billings from Aeroplan and reduced credit card spending. Finally the contract with Air Canada expires in 2020.
An audit of the charts will help identify the trend, support, and resistance associated with this stock.
The three-year chart depicts a stock that has been in a relentless decline that started in August of 2014 when it traded close to $17.00. The shares quickly breached support along the 50 and 200-day moving averages and was followed by a death cross in September of 2014. Another feature worth noting is the persistent resistance AIM has encounter along the moving averages over the course of the retreat.
The six-month chart pulls focus on the volatile trading pattern that has provided a number of profitable trades for those so inclined. The MACD and the RSI generated buy signals in February and May of 2016. Currently the momentum indicators are pointing to continued selling as the stock retreats from resistance along the 200-day moving average.
A final consideration is the dividend yield of 9.46% which in today’s pitiful rate environment is a mighty incentive to disregard the risks and chase the income. I would advise trading AIM for profit.
Next time I will investigate the charts for Alaris Royalty Corp. (AD TSX).
Make it a profitable day and happy capitalism!