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.
I therefore rate Enterprise Group 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.
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 adds: "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.
At The National Investor, Chris Temple has covered Enterprise for more than 10 years.
He writes: "Long before the U.S. energy industry was hit over the head with a 2” by 4” early last year, the Canadian oil and gas sector had been in the dumps for several years. Negative pricing had not prior been that much of an aberration at times where either heavy oil or excess natural gas production was concerned for many Canadian producers. A lot of them bit the dust over the last decade and many service providers along with them."
Temple adds: "For St. Albert, Alberta-based Enterprise... it was a tough road. Along the way this consolidator of equipment and entire businesses servicing the construction and energy industries had to do some serious consolidation of itself to weather the multi-year energy bear market in Canada. It has successfully done so. And now a leaner, somewhat retooled and refocused Enterprise Group is poised for a potentially dramatic comeback."
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.
National Inflation Association Disclosures
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. This message is meant for informational and educational purposes only and does not provide investment advice.
Chris Temple Disclosures
Chris Temple is editor and publisher of The National Investor. He has had an over 40-year career now in the financial/investment industry. Temple is a sought-after guest on radio stations, podcasts, blogs and the like all across North America, as well as a sought-after speaker for organizations. His ability to help average investors unravel, understand and navigate today's markets is unparalleled, and his ability to uncover "off-the-radar" companies is likewise. His commentaries and some of his recommendations have appeared in Barron's, Forbes, CBS Marketwatch, Wall Street's Best Investments/The Cabot Group, Kitco.com, the Korelin Economics Report, Benzinga.com, Palisade Radio, Mining Stocks Education, Mining Stock Daily and other media.
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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: None.
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