Premier markets education Identifying Institutional Entry & Exit Levels
Focus chart time horizon – Daily Educational Methodology – ‘We attempt to identify levels within the chart where price could not stay for any length of time, therefore indicating the probability of willing institutional buyers or sellers in or around these areas. Our long/ short universe is based upon liquid names (that tend to have options), whilst entry points are based on pullbacks and breakouts’.
In a sentence; Making a multi-month base, with a compelling series of higher lows and a bullish engulfing candle on Friday (shaded area)”
Medium Term Catalyst: Q3 Results (released October 25th)
Entry: Current levels, (note entry area signifies a price level were institutions most likely bought in the past).
Any educational trade recommendations are managed solely by the individual investor. We do not send out email alerts for exits or stops after this report.
Note these targets are based on possible institutional selling areas, (denoted by price previously dropping from these levels in the past, and/ or based on previous trading ranges for the stock)
Longer Term Target: $15.59 + 19% from current price Forward P/E: 25.7x
Medium Term Target: $14.22 + 9% from current price Average Volume (50-day): 6.5 million
Shorter Term Target: $13.64 + 4% from current price
Risk Management: Stop if price closes below $12.33, (-5%)
A break of this level could indicate a trend change
• Technical: The share has been making a series of higher lows since July culminating in a bullish engulfing candle last Friday. Stochastics are also looking more favorable, with the daily MACD nearing an upside cross, and the RSI also pushing higher from an oversold position (chart page 1).
• Standalone valuation: From a standalone perspective GG looks attractive from both a Price/ Book and Price/ Sales basis when measured against the Co.’s own historical averages.
• Peer valuation: On a Peer basis Goldcorp looks a tad cheap when viewed on a P/E metric. If the company’s PE read where to move back towards the industry average, it could imply an upside target price north of $18. The shares current dividend yield is 0.6%.
- Latest numbers: Q3 filings saw net earnings come in at $111 million, or $0.13 per share, versus $59 million, or $0.07 per share, for the same year ago period. Over the period GG delivered expansions at its Peñasquito, Musselwhite and Porcupine (Borden) operations. Whilst managements longer term strategy includes a 20% increase in gold production a similar uplift in gold reserves, and a reduction in AISC of 20%, with a completion target of 2021.
Goldcorp is a gold producer with operations in Canada, Mexico and South America
Latest figures – released October 25th; source www.goldcorp.com
Key management commentary takeaways
President & CEO – “We have delivered another quarter of on target gold production at low costs, led by strong operating performance at Peñasquito and Cerro Negro. The success of our efficiency program is evident in continued low operating costs and an expanded margin per ounce of gold produced…..”
Premier markets education
Identifying Institutional Entry & Exit Levels
‘7 for 7’ – key metrics from most recent numbers (as reported versus prior year period)
1. Net earnings: + 88%
2. Earnings per share (EPS): + 86%
3. All in sustaining costs: $827 per ounce versus $812 per
4. Production: 633k ounces versus 715k ounces
5. Cost cutting measures: $250 million with a target to achieve this by mid 2018
6. Reserves: (proven & probable) of 53.5 million ounces
7. Net cash (operating activities): $315 million versus $267 million
Sector spotlight – sentiment on the stock
The chart below is that of the VanEck Vectors Gold Miners ETF (GDX). Since late 2016 price has been grinding higher as investors once again look at the sector on the back of increasingly elevated global geo-political concerns. Sentiment on GG is currently positive with average target prices north of $17.
Anchor sector tailwinds
Elevated geo-political concerns could see investors increase weighting’s towards the industry group in the coming years, with additional demand drivers coming from Chinese and Islamic buying, (the Sharia Gold Standard was approved in late 2016 and allows Muslims (1.6 billion or 25% of the global population) more access to the gold market).
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