Somebody’s buying up Inco shares
Inco Ltd.’ s stock has been rocking, and that could mean someone is knocking at the nickel miner’s door. In a research note, independent technical analyst Don Vialoux said it looks like “someone is accumulating the stock in size.”
No guesses from Mr. Vialoux, however, as to who might be buying up Inco or why. His view is based on the observation that Inco’s on balance volume ( OBV) has been strong over the past six months.
Basically, OBV tracks the relationship between the volume a stock trades and the direction it moves. When OBV is strong, it shows a stock is trading more volume on the days it closes higher, and is taken as an indicator that a stock will rise.
Strong data over a period of months and Inco’s current high price could mean that smart money has been flowing into the stock and the public is now following suit.
That’s not to say there haven’t also been positive operational developments to the Inco story. Production at Voisey’s Bay is now on track, and a strike at the company’s Manitoba operations has been resolved. As a result, UBS Investment Research analyst Brian MacArthur said he is now “ more confident that the company will benefit in 2006 from increased production and reduced costs.” He raised his 2006 cash flow per share estimate to US$6.69 from US$6.46. He lifted his target to US$ 53.50 from US$ 48.
However, Mr. Vialoux suggests some caution, noting how these developments just don’t seem to warrant the shares soaring to an all-time high of US$46.67 on the New York Stock Exchange this week, when nickel has fallen 25% decline over the past five months. “Positive earnings momentum is well past its peak,” for Inco, he added. For example, at US61¢ per share, the street’s third quarter earnings estimate is well below last year’s actual results of US$1.05 per share, he noted.
Inco’s shares closed down US50¢ to US$46.17 yesterday in New York. Another day, another distribution hike This time it’s
Viking Energy Royalty Trust, boosting its monthly cash distribution by 50% to 12¢ per unit from 8¢ . Viking joins a long list of cashflush oil and gas trusts raising their payouts to shareholders.
Scotia Capital analyst Brian Ector said the move isn’t a surprise given strong commodity prices, combined with Viking’s “transformation of its asset base over the last year.”
He thinks the higher distribution rate is sustainable through 2006, and is now forecasting yearly distributions of $1.08 per unit in 2005 (up from 96¢), and $1.44 per unit in 2006 ( up from 96¢ ) . He also raised his rating to “sector outperform” from “sector perform,” and his target price to $9.25 per unit from $7.50. The lowdown on gold
Gold has been on a tear lately, shooting up to levels not seen since 1988. Inflation, argue some pundits, explains gold’s dramatic climb. Not so, argue analysts at BCA Research.
Because bond yields have stayed broadly flat in the U.S. and have moved lower in the euro zone, inflation doesn’t cut it as the reason behind gold’s rise, the Montreal-based research firm said in a note yesterday.
“More plausibly, gold’s rise indicates that there is still plenty of liquidity around,” BCA said. Hurricane fallout
World-weary investors are used to companies blaming unusually good or bad weather, let alone weather disasters, for disappointing results. But so far, Hurricane Katrina has been nothing but good news for Omni Energy Services Corp. ( OMNI/ NASDAQ), based in Louisiana.
Omni specializes in oil field services and supports companies drilling in marsh, swamp and shallow water and in the U.S. Gulf Coast. Investors rushed to buy the stock, thinking Hurricane Katrina is windfall for the small-cap firm. The stock more than doubled from US$2.06 on Sept. 20 to US$4.50 on Monday, a far cry from its 52-week low of US$1.21 early in 2005. With a market cap of US$14million, the company said its environmental division, Trussco Inc., has been hired by the Federal Emergency Management Agency in the U.S. to help clean up the New Orleans Arena and the New Orleans Superdome.
At the same time, another Omni division will furnish specialized marine equipment and personnel to emergency officials to help retrieve the dead. Last week, Omni also announced the acquisition of Preheat Inc., a company that rents oil-field services equipment. Omni closed yesterday at US$3.87, down US63¢ .