In this TSX Breakouts report, there are 46 stocks on the positive breakouts list (stocks with positive price momentum), and eight securities are on the negative breakouts list (stocks with negative price momentum).
Market momentum and breadth are both strong. Month-to-date, the S&P/TSX Composite Index is up 1.7 per cent with nine out of the 11 sectors in positive territory. The wide range of stocks participating in the market rally is reflected in the positive breakouts list, which has 12 energy stocks, eight financial stocks, eight industrial stocks, five technology stocks, five utilities, four consumer staples stocks, two consumer discretionary stocks and two materials stocks. There is a healthy mix of cyclical and defensive stocks exhibiting positive price momentum.
Another interesting observation is the high number of companies trading above their average target prices, 13 stocks or 28 per cent of stocks to be exact. A notable standout is Bombardier Inc. (BBD-B-T).
Since June 18, shares of Bombardier have soared 55 per cent, making it the second-best performing security in the S&P/TSX Composite Index, behind Energy Fuels Inc. (EFR-T), which is up 62 per cent.
In a news release issued on June 30, Bombardier announced a huge order and service agreement for 50 aircrafts - a deal valued at U.S. $1.7 billion. As a result, analysts hiked their target prices significantly. For instance, BMO’s Fadi Chamoun raised his target price to $150 from $130. RBC’s James McGarragle increased his target price to $175 from $108. Scotiabank analyst Konark Gupta lifted his target price to $150 from $105. And TD’s Tim James bumped his target price to $151 from $128.
Given the parabolic move in Bombardier’s share price, the stock is currently trading at a high valuation and short interest has soared. The share price may soon need to pause in order to digest these gains.
The company will be reporting its second quarter financial results before the market opens on July 31. Currently, the stock has 13 buy recommendations, three neutral recommendations and one ‘underweight’ recommendation from the analyst at Barclays.
The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. Conversely, if a stock appears on the positive breakouts list, it may reflect a stock that is overbought in the near-term and vulnerable to a pause in the price momentum or a pullback, especially if investors decide to take some profits off the table. If a security appears on the negative breakouts list, it indicates negative price momentum, and may signal deteriorating fundamentals or may reflect a buying opportunity if the stock is undervalued by the market.
Securities screened are from the S&P/TSX Composite Index, the S&P/TSX SmallCap Index, as well as Canadian small cap stocks outside of these indices that have a minimum market capitalization of $200-million.
A technical analysis screen does not replace fundamental analysis but can help identify companies worth having a closer look at.
This report should not be considered an investment recommendation for any of the listed securities.
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