Hi Lou:
I would like your analysis and opinion of Pure Technologies. I have been considering acquiring a position for the last 18 months.
Thanks,
Paul
Hey Paul,
Thanks for the assignment.
Pure Technologies Ltd. (PUR) has been growing its business in the management, inspection, and monitoring of physical infrastructure since 1993. The company develops and applies technologies used to serve the water and hydrocarbon pipeline industries as well as building and bridge operators. Worth mentioning is that PUR has been undertaking strategic acquisitions since 2005. On Sept. 12, 2014, Pure announced the takeover of Hunter McDonnell Pipeline Services Inc. for $8-million in cash and stock.
A review of the financial statements for PUR indicates that demand for their services is growing organically and through acquisitions. The massive deficit in infrastructure maintenance across North American suggests that the need for inspection and monitoring of these assets will hold an upward trajectory.
You mentioned that you have been considering a buy for the last 18 months which is a good long time to scout an opportunity. An investigation of the patterns on the charts will help identify how best to act at present and in the future.
The three-year chart tells the tale of a stock that built a base at $4.50 for a year before taking off in October of 2013 as it broke above resistance at $5.00. The advance took the shares to $8.00 by February of 2014 where it met resistance, leading to a pullback and a retest of support at $6.50 in May. Since then PUR has touched a 52-week high of $8.67.
The MACD and the RSI on the six-month chart have generated a number of profitable buy and sell signals. The buys in May and August and the sell in July were all well telegraphed to investors who were watching the indicators.
Clearly the best time to have bought the stock was about a year ago when it broke above resistance at $5.00. The stock is trading at high multiples and needs to deliver the next time it reports its earnings in November. Given your interest in the company you should establish a core position and keep some powder dry to add to it on pullbacks.
Make it a profitable and happy capitalism!
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