From un- to sustainable HIGH DIVY & healthier JE
From un- to sustainable HIGH DIVY&healthier JE
Looks like best of both worlds arrived has
High divy and sustainable SP appreciation
A.SHORTERS SUPPORT will be here for some time
BEFORE FEB ..... 14 m SH short
Say 10 m OLD ones will cover, 4 M WILL STAY PUT
AND AFTER JE WILL HIT THE TOP OF THIS MOVE
say ,4 M NEW SHORTS WILL APPEAR
.Ending up in 1/2 the old position
Feb 14 3 m vol onTSX= 7 x aver(+11% jump) , say 2 m short covering
Feb 18 2 m vol TSX = 4.5 x aver ,(+6 % jump) say 1.5 m short covering
Feb 18 NYSE vol 2.2 m = 4.5 x aver, say 1m short coverage
Feb 14 NYSE vol 3.6 m = 5 x aver say 2 m short coverage
TOTAL EST SHORT COVERAGE LEFT = 5.5 M
AT LEAST ANOTHER 5 M TO GO , and when SP will dip
they will now support the SP by buying the dips
B. The velocity of move
11% first day
6.2 % second
Est 3-rd day tomorrow 3 % to $CAD 9
Est 4 th day 1 % intraday to %9.1 and maybe reversal
with higher new range 8.5 - 9.3
C .TA
1. The golden cross 50 over 200 DMA happened in Nov
Now way above 50 DMA
2 .The platinum cross 20 over 50 DMA happened in Oct
and 20 DMA stays over 50 since
3. Denial = not fulfilment of H&S is one of most powerful moves
4. RSI will get overbough in couple of days but MACD
has way to go up
5 The cumulative vol in last 2 days up- move surpassed
the cumulative vol on 2 worst days of drop Jan 22 & Feb 1
by like 10% and is HIGHEST IN (at least 5 Y ) HISTORY
geeeesus
https://stockcharts.com/c-sc/sc?s=JE.TO&p=D&yr=0&mn=1&dy=0&i=t18029173674&r=1392766702051
6 Accumulation indicator on highest level in 2.5 years
And has way to go up
geeesus
7. On balance vol on 52 high and has way to go up
8 Force of up- move indicator HIGHEST IN HISTORY
Matched the force of down move of 1 y ago news of reducing divy
Panic buying in 2 words
https://stockcharts.com/c-sc/sc?s=JE.TO&p=D&yr=3&mn=0&dy=0&i=t75021591905&r=1392767138345
9 .The rising , wide ( volatile ) chanel trendline support
is at 7.8 and rising
The upper rising line of chanel is at 8 .85
( just hit it= can move down short term ) but if
rising channel will be intact ..shall hit $ 10 within 3 months
Which corresponds with Q1 and whole FY annoucement date in May
10. Horizontal resistance at $ 9 - 9.4 requires couple of months to work out
And $10 will be the real target .
11. Moved above the 2 y big downtrend at $ 8 with force
4 down-trending GANN lines taken out one after another.
The next and LAST , 5 Y downtrend line resistance is at $ 11 and dropping
==========
D FUNDAMENTALS
1. The 1 Y -long roundtrip $ 8.7 to 5.75 and back to 8.8
completed . Bottom buyers in Aug 2013 locked -in 15%-17% divy
+ 55% SP gain in 6 months
The divy reduction in March 2013 punished and forgiven now .
2. At $8,76 in March it was a story of too high & unsustainable divy
( 15% before and 10% after reduction).
Therefore SP went down back to 15% .
At $ 8.8 now it is a story of HIGH AND SUSTAINABLE DIVY
for at least 2 Y ( till worries of 2017 maturing debt will emerge )
Therefore SP must go up to a yield comparable with other sustainable divy cos
Which is say , still excellent 6.5-7%, ( P/ YIELD 14-15 ) suggesting SP $12.6
$0.84 divy x 15= SP $12.6
At 8.4% yield = SP $10 the buyers shall still pile up .
3. The balance sheet got cleaned up in Q 1 2014
= POSITIVE EFFECT of Q1 WILL BE REPORTED in mid May .
** Maturing $ 90 m ( 86m to pay back )2015 debt refinanced
by new 150 m ... the balance will be used to pay down
the highest interest debt and/or give the cash flexibility
to IE pay divy in case payout will exceed CF in the odd quarter
( they historically sustained 120-160 % payout ratio for at least 1 y
before reducing divy, when the turn around didn't happen )
** the not profitable ( though lately slightly profitable )
ethanol plant sold and another $ 60 m debt erased
4. The cold weather will not boost JE Q1 income as much as
one would imagine. The profit margin on NG sales is locked in
in most cases ( same as the $1.4 b locked-in future profits
.... NG or electricity price fluctuations and the whole mark
to market of the JE book is kind of stupid and misleading in case of JE
..they don't fit exactly the accounting standards )
Bought for winter use at X price and sold at Y price
with fixed Z profit.
The main positive will the higher sales volume
In 2012 /13 winter they didn't sell all NG because of warm winter
and SP tanked .
Now they will sell all they have got and then some
The untangible benefit - customers thank God and JE
for fixing the price for them and promissing themselves
to stay with JE " forever"
Sending them a note with the bill showing how much
they saved vs 100% soaring NG price sahould be helpful.
Comparing their bill to a neighbor not using JE - too.
There may be some last - 1 time charge for the sold ethanol business.
5. Above $ 10 it can get tricky because this new debt
is convertible at $ 9.4 .
It is hard to figure out the cost /benefit of conversion
Dissaperance of $ 150 m debt and it's interest directed to
income ,divy payment will strenghten the balance sheet
But 12% dilution and $ 13 m more needed to pay the divy
hmmm
Conversion for debt holders won't be attractive below
$13 now and $11.5 in 2 y .
Now they have guaranteed 32.5% over 5 y of loan
which equals $ 12.5
20% after 2 Y = $ 11.2
E. THE BEST KEEPT SECRET - GOOD DEBT
WHILE NO ANALYST CAN EVER FIGURE OUT /PREDICT THEIR INCOME
( tens of markets with hundreds of variables ,different prices , regulations ,
hundreds of laddered hedging positions against multiple factors etc )
... ONE SEGMENT IS SIMPLE ,SAFE, GROWING THE MOST
AND WILL GRADUALLY TAKE HIGHER PERCENTAGE OF
G U A R A N T E E D PROFITS .
The water heater ( + furnance , A/C , smart ,thermosstat) rental.
Primitive ,low margin but classic capitalist idea to make money
using someone else's capital .
First 7 Y ..payback of loan and interest on the tank
= no income but also no burden = self sustaining.
Debt instead .... looks not good on surface
Next 8 y or longer 100% rental income goes to profits and the debt dissapears
For now they recycle the portion of free of debt tank's income into more
tanks . THEREFORE DEFFERING THE PAYDAY IN FAVOR OF
BIGGER PAYDAY LATER and higher assets base
. ..BUT GROWING THIS GOOD DEBT meanwhile
THIS PORTION OF " embedded profits " is secure 100%
But they will do this `` embeding`` = growing the future profits
( not so much present) for ever = till market saturation.
Neutral = close to 0 effect on current cost ,profits
But substantial positive effect on future.
So , JE is set to last like forever ..but can choose at any time
to dip into this growing piggy bank , enjoy the stash
If Paulson ,Joyce are after something the obvious candidate is
that piggy bank ./ "retirement savings ".
The debt against tank assets can grow to $$ trillion
as far as I am concerned ,but is contradictory to `normal /intuitive
assesment of JE health .
Now it is at like 1/4 of the overall debt and shouldn't be counted /
EQUALLED TO regular corporate debt
GOOD DEBT ( AS GOOD AS PAID -OFF ) = FUTURE ASSET
F. All JE income speculations are futile - to complex
,too muich time shifting , too seasonally fluctuating,
too specific to be measured adequantly by standard metrics .
So, the only thing left , is to watch if they have enough
cash , from whatever sources , left to pay the divy
( even if payout higher than 100%)
After all ,the $ 120 m needed to pay divy is only
3.5% of $ 3.4 b rev .
Small re-evaluation of just multiples ( without any income change )
from P/S 0.35 to P/S 0.5 = 45% SP rise to $ 12.5
PS
i second OilGold with Q about the difference in Stockcharts and other sites charts
On the other charts there is no resitance till $10 - and support $8.1
there are more bullish
.