Category Archives: RBA

Last year, we saw Ritchie Brothers (RBA) go from $27 to $35 overnight due to an acquisition that was made by the company. In our opinion, the jump in the stock price needed “…to be resolved in some way or another.” The resolution came after RBA managed to climb as high as $38.77. Currently, RBA is down –23.42% from the high and down –11.37% from the same date last year. Below is our update on RBA and the possible direction of the stock from here.

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Ritchie Brothers: Now What?

Posted on September 1, 2016 by nlo-admin | Leave a comment

In our June 12, 2016 posting titled “Ritchie Brother: Inflection Point?” we said the following:

“…it appears that [Ritchie Brothers] RBA is at a threshold that has not been exceeded since early 2011”
“…the stock could rise to $48.00.”
the stock needs “…some kind of reprieve from the most recent parabolic move in the price”

Since June 2016, RBA has managed to trace out the following price action (in red):

As the last bullet point indicated and the price chart has reflected, the parabolic move was resolved with a decline to the recent low of $27.27. Unfortunately, we now need another parabolic move from $27.27 to the recent jump above $35 to be resolved in some way or another.

Another item that was pointed out was the possibility that RBA could exceed a level in Edson Gould’s Altimeter, a level that had not been exceeded since 2011. The recent price action since June 2016 has allowed this to occur as well.

We’re still thinking that the rise to $48 is possible. The recent news of the acquisition by RBA of IronPlanet makes it more possible to hit our target. However, the recent price activity of going from $27 to $35 overnight based on an acquisition simply means that achieving the $48 target will take more time than we had anticipated.

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Posted in Altimeter, Edson Gould, RBA

Ritchie Brothers: Inflection Point?

Posted on June 12, 2016 by nlo-admin | Leave a comment

We noticed an article on SeekingAlpha.com dated May 12, 2016 titled “Ritchie Bros.: Bull Thesis Playing Out Despite Continued U.S. Dollar Strength” by John Zhang. Although the article allows only paid subscriber access, we believe that as a follow-up article to one published on December 29, 2015 titled “Ritchie Bros: Auctioneer Trading At Bottom Prices”, where the stock price increased +35.41%, there should be at least a cursory review of the stock. After all, Mr. Zhang was spot-on with the stock price in December 2015, so there must something in what is being considered.

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Canadian Stock Review: August 16, 2013

Posted on August 17, 2014 by nlo-admin | Leave a comment

Performance Review

Below is the 1-year performance of the Canadian dividend stocks from our August 16, 2013 list.

symbol	name	2013	2014	% change
CUF-UN.TO	Cominar REIT	19.3	19.51	1.09%
BEI-UN.TO	Boardwalk REIT	55.6	68.2	22.66%
CAR-UN.TO	Canadian Apt Properties REIT	20.4	23.84	16.86%
EMA.TO	Emera Inc.	31.3	34.61	10.58%
AX-UN.TO	Artis REIT	13.8	15.88	15.07%
D-UN.TO	Dundee REIT	29.6	28.95	-2.20%
CWT-UN.TO	Calloway REIT	24.9	26.25	5.42%
REI-UN.TO	Riocan REIT	23.8	26.75	12.39%
FTS.TO	Fortis Inc.	31.2	33.55	7.53%
FCR.TO	First Capital Realty Inc.	17.2	18.95	10.17%
FTT.TO	Finning International Inc.	22	32.83	49.23%
REF-UN.TO	Canadian REIT	40.9	48.47	18.51%
BDT.TO	BIRD CONSTR INC	11.9	15.15	27.31%
LB.TO	Laurentian Bank of Canada	45.1	50.86	12.77%
TLM.TO	Talisman Energy Inc.	11.3	11.32	0.18%
CM.TO	CIBC	78.8	101.32	28.58%
JE.TO	JUST ENERGY GROUP INC	6.34	6.37	0.47%
TRP.TO	TransCanada Corp.	46.5	55.59	19.55%
NA.TO	National Bank Canadian	39.15	48.84	24.75%
RBA.TO	Ritchie Bros. Auctioneers	19.6	26.1	33.16%

The entire list gained +15.70% as compared to the Toronto Stock Exchange Composite Index gain of +20.16%. The stock with the biggest gains in the last year was Finning International (FTT.TO) with a gain of +49.23%. The stock with the largest decline was Dundee (D-UN.TO), now known as Dream Office Real Estate Investment Trust, with a decline of –2.20%. At the time, we didn’t think much of the REIT sector and said so with the following commentary:

“…we are worried that the REIT sector may spiral downward as was the case in the rising interest rate environment of the early 1970’s.”

We were completely wrong in our assessment of the REIT sector as rising interest rates either never materialized or did not have the anticipated negative impact. The gains that were achieved by the REIT sector were exceptional in our view. As an example, Boardwalk REIT gained +22.66% in the last year for a total return of +26.22%.

Two stocks of interest to us were Just Energy (JE.TO) and Ritchie Brothers Auctioneers (RBA.TO). We said the following of Just Energy:

“Because JE.TO is trending lower, we recommend reassessing the stock when and if it declines to the $6.15 level. The dividend for JE.TO should not be a consideration for this stock as there are continued risks to the dividend going forward.”

After our August 16, 2013 posting, Just Energy’s stock price declined to $6.16 on August 19, 2013. Soon afterwards, Just Energy increased as high as $9.03 by March 19, 2014, a gain of +46.59%. so far, we’ve had tremendous luck with JE.TO rising and falling as anticipated (February 15, 2013 & July 31, 2013). We can’t be certain of the prospects going forward for Just Energy, however, those interested in the stock cannot rely on the dividend and should invest accordingly.

Regarding Ritchie Brothers Auctioneers (RBA.TO), we said the following:

“Another stock of interest on our watch list is Ritchie Brothers (RBA.TO). Although we’d like to provide original analysis each time we write our postings, we find that sometimes such a pursuit is completely unnecessary. RBA.TO completely fits the billing on this matter. On August 17, 2012 (found here), we said that RBA.TO had the pattern of falling to $18/$19 and then recovering to higher ground.”

As we had observed, RBA.TO fell to $18.90 and has since risen as much of +33.16%. At this point, selling the principal position in RBA.TO would be acceptable for the purpose of raising cash or acquiring alternative investments.

Our August 2014 Canadian Dividend Watch List can be found here.

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Posted in Canadian Dividend Watch List, D-UN.TO, FTT.TO, JE.TO, RBA

Canadian Dividend Watch List: August 17, 2012

Posted on August 18, 2012 by nlo-admin | Comments Off

This is a list of Canadian dividend stocks that currently, or in the past, had a history of consecutive dividend increases. For those wishing to find the most complete fundamental information on these companies, we recommend visiting one of Canada’s leading financial websites, the Financial Post (found here). However, Yahoo!Finance probably has the better long-term charts and historical dividend data.

Symbol	Name	Price	P/E	EPS	Yield	Price/Book	% from low
IGM.TO	IGM Financial Inc.	37.25	11.3	3.3	0.40%	2.19	1.20%
FFH.TO	FAIRFAX FINANCIAL HOLDINGS LTD.	379.97	0	0	2.70%	1.07	3.59%
GS.TO	Gluskin Sheff + Associates, Inc.	13.89	8.37	1.27	4.50%	5.26	5.47%
SJR-B.TO	Shaw Communications, Inc.	20.01	19.33	1.52	4.90%	2.58	5.71%
SNC.TO	SNC-Lavalin Group Inc.	37.41	14.06	1.98	1.60%	2.89	7.13%
PWF.TO	Power Financial Corporation	25.31	11.37	2.42	5.60%	1.53	7.15%
AGF-B.TO	AGF Management Limited	11.56	8.9	1.02	9.40%	0.94	7.24%
RBA.TO	Ritchie Bros. Auctioneers Incorporated	19.25	32.08	0.77	2.60%	3.19	7.54%
CCA.TO	Cogeco Cable Inc.	37.08	7.3281	5.06	2.70%	1.55	7.63%
EMP-A.TO	Empire Company Limited	58.21	10.64	4.99	1.70%	1.16	8.91%

Watch List Summary

Of particular interest on this Canadian Watch List is Ritchie Bros. Auctioneers (RBA). The very first time that this company appeared on our list was August 23, 2010 when the stock was trading at $18.94. Immediately after showing up on our list, RBA vaulted to $29.66 or +56% by April 29, 2011.

After attaining the $29.66 level, Ritchie Bros. declined –36% back to the $18.85 level. RBA then rose nearly +37% by late February 2012 before returning to the current level of $19.25. The consistency of RBA to rise from the $18/$19 level in the last 6 years has got to end somewhere. The stock market is very quick to take away anything that appears too easy. Therefore, we need to find a reasonable margin for error if we were to enter into such a transaction.

According to Yahoo!Finance, Ritchie Bros. is “…an industrial auctioneer, sells various equipment to on-site and online bidders. The company, through unreserved public auctions, sells a range of used and unused industrial assets, including equipment, trucks, and other assets utilized in the construction, transportation, agricultural, material handling, mining, forestry, petroleum, and marine industries.”

We normally don’t rely on “stories” behind a stock because such analysis typically leads to false hope and unrealistic expectations. However, here is what we think the “story” on RBA might be. As secular bear markets tend to coincide with a commodity bull market, there will be a high demand for the very equipment that RBA auctions. As many companies try and fail to enter into the capital intensive mining and farming sector, RBA will be quick to step in and auction the equipment that will be in high demand. The more auctions, while there is exceptional demand for the equipment, the better the earnings for RBA.

According to Edson Gould’s Altimeter, Ritchie Bros. hit an extreme low in 2009. Through all of the gyrations in the market since, RBA’s Altimeter is now trading at the equivalent level as the 2009 low.

In terms of the downside risk on RBA, we believe that a critical support level is at $17.84. According to Dow Theory, if RBA were to fall significantly below this level then the next downside targets would be (indicates percentage decline from current price of $19.25):

$15.81 (-17.87%)
$13.78 (-28.42%)
$11.75 (-38.96%)

From a Dow Theory standpoint, RBA is dancing along that fine line of $17.84 and has successfully done so for the last 6 years. This suggests that the stock has either pent up value or is going to get crushed to the downside. Cautious as we might be under normal circumstances, we believe that RBA is worth considering at the current price with another planned purchase if the stock declines to the $13.78 level.

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Posted in Canadian Dividend Watch List, GS, RBA, Ritchie Bros.

Odds and Ends

Posted on July 12, 2010 by NLObserver Team | Leave a comment

Question:

Do you think Richard Russell has been overrated regarding his abilities to forecast the directions of the markets? It seems like one good call (1975) allows one in his position to reap benefits for years despite demonstrating no skill when one goes back and, with the benefit of hindsight, takes a critical look at the entire record.

Our Thoughts:

Anyone, including NLO team, who attempts to predict the stock market is under extraordinary pressure. The challenge that Russell presents is that he often ignores that he has a bias towards the market falling rather than rising. This becomes a problem when, against his experience and better judgment, Dow Theory might be indicating that the direction is up despite all the negative market fundamentals.

Again, Dow Theory is supposed to include all the current and foreseeable hopes and fears as it relates money. I think that if Russell would follow Dow Theory or even his PTI indicator more often he would get a more accurate readings on the market.

It should be noted that within the content of his Dow Theory Letters from 1958 to the present, there are many great calls. As I post more reviews of Russell’s letters, I will be able to point out too many instances of where Russell was spot on.

Unfortunately, Russell often didn’t stick to his guns or he forgot his earlier good advice or information. As an example, Russell talks about the importance of compounding. This cannot be accomplished if you’re buying and selling based on Dow Theory. Another example is Russell’s commentary on values. You can’t speak of values if you’re primarily focused on ETFs, index funds or stocks that don’t increase their dividends when plenty of them exist.

The pace and excitement of the markets become challenging for anyone to remain focused on the fundamentals. Russell has fallen astray of the basic principals of Dow Theory and value investing. Although the two seem mutually incompatible, there is a middle ground which Russell hasn’t attempted to address in all the years of his work.

Question:

I'm curious that you write "In my observations, market volume has increasingly become an addendum to Dow Theory." Meaning, only as a sidelight, or as an increasingly important variable? It does seem harder to judge given increased manipulation on light volume. Looks like lots of stick saves last week.

Answer:

It may be a function of the markets being driven by various large institutions (mutual funds, hedge funds, index funds, ETFs etc...) but volume seems to be less reliable when trying to determine sentiment and trends on the NYSE. I suspect that the diminished impact of smaller participants and derivative markets have had a lot to do with my concerns about volume not being a strong indicator. However, I will continue track volume just in case.

Question:

What did you do with the proceeds from the sale of WTR?

Answer:

After investing in WTR we recommended CEPH and SVU which generated 13% and 11% gains respectively. Both stocks were on our Watch Lists and in each case we accomplished our targets and made subsequent sell recommendations. In addition to our posted recommendations, we also participated in CWT and GENZ. Both positions accomplished our short-term after tax goals which allowed for the purchases of new stocks on our dividend Watch List.

Our article titled “Meridian Biosciences and Other Profitable Market Lessons” provides a framework for the strategy we’d like to employ when investing in Dividend Achievers. Another article that weighs heavily on our investment decisions is titled “It Isn’t Easy Being Green.” That article outlined Hetty Green’s approach to handling her funds when not invested in stocks. We’ve simply applied a similar strategy to Dividend Achievers and Nasdaq 100 stocks at a new low (after careful analysis).

Question:

Would you venture to provide a top pick from your current dividend achievers list?

Answer:

As you can tell, the current list has too many companies that are candidates for investment. Without providing any detailed analysis, I would say that my top four choices for additional research would be Ritchie Bros Auctioneers (RBA), Northern Trust (NTRS), Dentsply (XRAY), and Meridian Biosciences (VIVO). We expect, and hope, that the price of these stocks will fall further while we get more research in. We're using the March 2009 low as our benchmark for all investment analysis going forward and we hope that you do the same.

Russell Blurb:

For what it is worth Richard Russell’s commentary today (July 12, 2010) seems to fly in the face of the commentary that he gave on Friday July 9, 2010. Go figure:

“The recent non-confirmation by the Transports may have served as an entry spot for bold speculators, but I doubt if the 2007 highs in the Averages will be approached or bettered. Nevertheless, we may see a brief period of better markets, a "breather" in the long life of the bear. I believe this primary bear market will extend into 2016.

A near-term marker or target is to see whether the Dow and the Transports can better their recent June highs. Those highs were 10450.64 for Industrials and 4467.25 for Transports. Write those figures down. I'm betting that the two D-J Averages will not be able to better the June highs. Let's wait and see.”

All I can say is, at least he indicated an upside target that matches the one we came up with yesterday. Can't understand how he was so bullish on Friday and is now sounding so skeptical today.

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Posted in CEPH, CWT, GENZ, NTRS, RBA, Richard Russell, SVU, VIVO, WTR, XRAY

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Canadian Dividend Achievers

Posted on June 7, 2010 by NLObserver Team | Leave a comment

This list of top 8 Canadian Dividend Achievers, published by Mergent's, includes current and former Canadian Dividend Achievers and then ranking the companies based on those closest to the 52-week low. We've updated the stock symbol to connect to the Financial Post, one of Canada's top business publications. You'll find the most complete fundamental information on these companies at the FP website. If you know of a better resource then by all means pass it on, we'd love to spread the word about quality Canadian Dividend Achievers.

Symbol	Name	Price	% from Low
CCO.TO	CAMECO CORP	$24.32	1.21%
RBA.TO	RITCHIE BROS AUCTIONEERS	$20.87	3.42%
IGM.TO	IGM FINANCIAL INC.	$39.26	4.61%
IMO.TO	IMPERIAL OIL	$39.80	5.43%

ESI.TO	ENSIGN ENERGY SERVICES	$13.05	7.05%
SU.TO	SUNCOR ENERGY INC.	$32.12	7.42%
SJR-B.TO	SHAW COMM. CL.B	$19.28	8.87%

SNC.TO	SNC-LAVALIN SV	$43.50	10.10%

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Posted in CCO, ESI, IGM, IMO, RBA, SJR-B, SNC, SU

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Category Archives: RBA

Ritchie Bros. Price Momentum $RBA

Ritchie Brothers 10-Year Targets

Review: Ritchie Brothers

Ritchie Brothers: Now What?

Ritchie Brothers: Inflection Point?

Canadian Stock Review: August 16, 2013

Canadian Dividend Watch List: August 17, 2012

Odds and Ends

Canadian Dividend Achievers

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