Friday, April 22, 2016

More on the value of street consensus:

According to The Wall Street Journal – April 21, 2016 the Analyst Ratings on the TSX listed Alimentation Couche-Tard Inc (ATD.A) was currently 11 buys, 2 holds and no sells. Three months ago it was 12 buys, 2 holds and no sells. We all know that a “hold” means they just don’t know.

A few posts ago I observed that on BNN’s popular Market Call shows there was a growing tendency for the callers to ask the host for the “street consensus” in addition to the guest opinion on a particular company. The problem is the street consensus is usually a “buy”, a “hold” and rarely a “sell”.

One Market Call guest correctly described Couche-Tard to be “One of the darlings of the TSX via growth by acquisition.”

The fundamentals I see are based on common sense – first the stock was over loved and over-owned and secondly when you grow by acquisition – each one has to be bigger in order to propel the growth story..(sort of like the Valeant story)

Technically the “B” shares are trading below both the 50 and 200 day simple moving averages, the stock is underperforming the TSX Comp and the S&P500 and the point & figure has peaked and the down O’s sit on key support at $55

Our weekly bar chart of Couche-Tard spanning about 100 weeks displays the relative perform vs. the TSX Comp and Couche-Tard’s 40-week moving average. Clearly the street consensus and the technical picture do not agree.


Dave said...

I agree . One of your peers, Hap Sneddon had to sit and listen while 6 straight callers asked for consensus . I finally tweeted to them that they need to take this to a different show as we tune in to hear the guest's opinions. said...

Hi Dave

Maybe BNN should have a Street Consensus show

We need consensus on that

Bill C