Review: Just Energy Meets Resistance

On our February 18, 2013 Canadian Dividend Watch List, we reviewed the prospects for Just Energy (JE.TO) and said the following:

“On the technical front, Just Energy is fast approaching the 2009 low of $6.60 after breaking below the November 2012 low of $8.00.  There appears to be tremendous technical support at the $6.00 level going all the way back to 2003.  If you’re interested in this stock, consideration of purchases of Just Energy should be entered into in three phases, once at $6.60, $6.00 and $4.00.”

Since our February 18th posting, Just Energy has exhibited the following price movement:

For whatever reason, Just Energy adhered to the “tremendous technical support at the $6.00 level .”  As we said, purchases at $6.60 and $6.00 would have resulted in a theoretical average purchase price of $6.30.  Based on the current price, Just Energy has gained +17.01% on a total return basis (price appreciation and dividend payment) in a six month period and +34% on an annualized basis.

It is times like these that we recommend selling the principal in order to avoid watching exceptional annualized returns evaporate.  We are resigned to the possibility that $8.00 could be a technical resistance level.  Additionally, the $6 support level has moved down to the March low of $5.89.  No use getting fancy about exceptional gains as the dividend has already been cut -32% since our February posting (found here).