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A Share To Buy and Hold?

12/28/16 04:17:48 PM
by Koos van der Merwe

Finding a share to buy and hold forever is not easy. However, the Canadian stock market does offer a few.

Security:   PZA-T, EIT-T
Position:   Accumulate

With the U.S. stock market rising strongly after the recent Presidential election, looking for a share to buy and hold is becoming a matter of waiting for those shares that have risen strongly to correct, and then buying as the share price triggers a new buy signal using your favorite indicator. However, there are many who prefer looking for a long term dividend or interest bearing stock rather than trading the market. With the US$ so strong against the C$, looking at the Canadian stock market may be the way to go. As at December 26th, 1 US Dollar equal 1.35 Canadian dollars. Below are charts of shares to look at.

Figure 1. Monthly chart of Pizza Pizza.
Graphic provided by: AdvancedGET.
 
The chart in Figure 1 is a daily chart of Pizza Pizza. Pizza Pizza is a fast food restaurant company with its headquarters in Etobicoke, Toronto. Its restaurants are mainly in the Canadian province of Ontario, however branches do exist in Quebec, Nova Scotia and Vancouver. The company presently pays interest monthly, equivalent to 4.92% yearly based on Friday, December 23rd's stock price of $17.38. Of course the risk is always that the C$ will start to strengthen against the US$, or that the company may reduce the interest it pays. The chart in Figure 1 is a monthly chart showing how the share price rose from a low of $5.35 in September 2009 to its present price of $18.00. An Elliott wave count suggests that the share price is completing a WAVE 5 and should correct. This is confirmed by the RSI indicator which is at overbought levels.

Figure 2. Daily chart of Exchange Income Trust.
Graphic provided by: AdvancedGET.
 
A second Canadian company to look at that offers a good yield is Canoe EIT Income Fund. The company is one of Canada's largest closed-end investment funds designed to maximise monthly distributions and capital appreciation by investing in a broadly diversified portfolio of high quality securities. Based on Friday, December 23rd's share price, its yield is 10.24% pa. The chart in Figure 2 is a daily chart showing how the share price has risen from a low of $9.58 on January 20th, 2016 to its present price of $11.95. The Elliott eave count is suggesting that the share price has completed a WAVE 3 and is retracing in a WAVE 4. This is confirmed by the RSI indicator which has suggested a SELL signal. Do note how volume has fallen as the share price fell, a sign of strength.

Then, of course, there are always the Banks like Royal Bank (RY) and many other Canadian companies that all offer a yearly dividend or interest payments either paid monthly or quarterly. A&W Revenue offers 4.33% pa paid monthly. Chorus Aviation B shares offers 6.64% pa paid monthly. The Keg offers 5.25% pa paid monthly and Sciti Trust 7.04% pa paid monthly just to name a few. I wish you all a very happy and successful New Year.



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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