In the environment we are now in the best thing investors can do is find stocks that are impervious to declines in the market indices. This is easier said than done, as most stocks are like sheep that move with the flock, but even though they can be hard to find, there are some around, like the Enterprise Group Inc. (E:TSX.V).
Whilst the statement “As the economy regains further strength…” on the company overview page of its website is, of course, laughable, the chart for the company’s stock is a picture of strength, and while we cannot entirely rule out that the picture will suddenly turn sour, the odds look very high that it will soon break out into another up-leg for reasons that are clear to see on its 1-year chart.
On the 1-year chart we can see that the stock has been trending steadily higher since September of last year and it is most encouraging to see that it was not at all adversely impacted by the plunge in the broad stock market indices of the past couple of weeks. Following a spike higher late in January and early in February, it has been consolidating in what can be classed as a bullish Ascending Triangle.
Action has been positive in recent weeks with an attempt to break higher in the middle of May followed by a small bull Flag forming that in recent days has led to it trying to break higher again.
This is the 4th attempt to take out the resistance at the CA$0.42 level and with the pressure off the broad market at least temporarily, it looks it is going to succeed in breaking out above this resistance imminently, and with the book value of the company currently at CA$0.71 a share, why shouldn’t it?
The long-term 12-year chart enables us to figure out what is driving the steady uptrend — the price is rising up out of the right side of a large Saucer base pattern.
It also enables us to see that there is a resistance level in the CA$0.60 area where the price turned tail and dropped after an aborted attempt to break out of a large Pan base that formed between 2015 and 2018. This time looks a lot different, mainly because of the strongly positive volume pattern and volume indicators, so it is considered highly unlikely that this promising pattern will abort.
Other newsletter writers also see upside in Enterprise.
Gerard Adams at the National Inflation Association writes: "Canadian Oil Sands industry groups have combined this week into a new organization called Pathway Alliance that will focus on reducing GHGs. Because Canadian Oil Sands producers work in remote areas, they rely on diesel power generators, which are one of the primary causes of Canadian Oil Sands GHGs. Enterprise's wholly owned Evolution Power Systems is the only player in Canada that has retooled its fleet to low-emissions natural gas generators.
Adams added: "Enterprise has no competition in supplying natural gas microgrid equipment to Pathway Alliance members. Most of Enterprise competitors went out of business during the oil industry downturn of previous years. Only Enterprise had the financial nimbleness to retool to the lowest emission equipment. Most of Enterprise's clients are now fueling their Evolution Power Systems low-emission microgrid equipment using their own natural gas produced on site that would otherwise go to waste. This eliminates the need for nonstop 24/7 truckloads of diesel fuel deliveries — further reducing greenhouse gas emissions and making the roads in Canada safer."
Adams predicts that Enterprise will go "much higher" and is a "steal" below its book value of CA$0.71 per share.
Enterprise Group is therefore rated an immediate buy for all timeframes. Because of its strong chart and setup and because of its ability – up to now – to remain unaffected by selloffs in the market as a whole, it is considered to be worth going overweight on this one.
CliveMaund.com Disclosures
The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports.
As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
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Disclosures
1) Clive Maund: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: Enterprise Group Inc.
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3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Enterprise Group Inc., a company mentioned in this article.
