Bell Canada Enterprises Inc. is a hold

Aug 2nd, 2016 – 1 Comment

Pulling back from an overbought situation


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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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BCE LOGO

Hi Lou,

I enjoy listening to you every morning and evening coming and going to and from work. I’m getting nervous about my Bell Shares. I trust you.

Julie

 

Hey Julie,

Thanks for the assignment and your kind worlds. I’m happy that you enjoy listening to AM640 given that I have been with them for 15 years!

Bell Canada Enterprises Inc. (BCE TSX) is part of Canada’s telecom oligopoly and as such enjoys what Warren Buffett refers to as a moat around their business. Barriers to entry include regulatory hurdles and huge capital requirements. From that perspective I would say that you should take a step back from your concerns about valuations and really investigate what has put you on unsure footing.

 

An inspection of the charts will help you in making a decision.

 

 

BCE

The three-year chart indicates that BCE has been on a long steady ride to the penthouse of profits. The golden cross that formed in November of 2013 when the shares were trading near $40.00 was the first sign that investors could expect continued buying to take this one higher. The sustained uptrend line has been tested along the advance but not breached. The same can be said of support along the moving averages.

 

 

 

BCE2

The six-month chart depicts the retests of support along the 50-day moving average in April and June as BCE made its way to a 52-week high of $63.41 in July. At the high the RSI and the MACD both generated sell signals as the stock became overbought. At present the shares are holding support near $62.50 and offering a dividend yield of 4.39%.

The evidence at hand is not pointing to a trend reversal at this time. There could be more selling to follow but the trend over the last three years has witnessed investors buying on weakness. I wouldn’t shoot this running horse.

Next time I will investigate the potential of Aimia Inc. (AIM TSX) for Kevin.

 

Make it a profitable day and happy capitalism!

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