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CUP WITH HANDLE


A Cup With A Dividend

07/31/12 07:58:51 AM
by Koos van der Merwe

When times are tough, look to buy a stock that pays a dividend.

Security:   PZA.UN-T
Position:   Buy

Figure 1 is a weekly chart and shows how the price has moved from a low of $5.21 in September 2009 to a high of $10.72 by May 2012. In all that time, the dividend paid has been constant at $0.06 cents per share per month. At the price of $5.21 the yield was a very comfortable 12.83%. At today's price of $10.25, the yield is only 7%, but still a comfortable figure. Canadian residents are eligible for the enhanced dividend tax credit, which makes it more comfortable and a share to be held for the long term.

FIGURE 1: PZA, WEEKLY
Graphic provided by: AdvancedGET.
 
With the daily chart (Figure 2), the first thing we see is a cup & handle pattern that seems to be developing. The target suggested should the price break above the handle at $10.43 is $11.02. The chart also shows an Elliott wave count, with a fifth wave target of $11.41. The PTI is 33, suggesting a probability of this occurring is 33%. Any PTI above 32% is acceptable. The relative strength index (RSI) is moving up, and even though it did not fall below the 32 level before rising, it is still suggesting a move to above the 70 overbought level.

I would be a buyer of Pizza Pizza (PZA) should the share price break above the $10.43 level if I am chasing growth, but because I am looking for a dividend, I would take the chance and buy PZA at the current price, hoping to score should the price rise to either the $11.02 target or the $11.41 target.


FIGURE 2: PZA, DAILY
Graphic provided by: AdvancedGET.
 



Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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