Hi Mike,
I've taken a look at CHPS for you. Here's what I found on both the TA and the FA:
To confirm your question, yes, it is forming an ascending triangle.If it occurs, look for a breakout above 12, where it is currently meeting resistance. Other technical indicators such as stochastics indicate that it is neither overbought or oversold, MACD(moving average convergence divergence) also is indicating a positve trend. That slight jump you saw in the stock's price can probably be attributed to that indicator turning upward. It is also sitting above the all-important 50 day moving average, so for the short-term TA, it is looking positive.
Balance sheets look strong. CHPS currently has 2% debt, a current ratio of 3.92(anything greater than 2 is good), $3.70 cash/share, and a very strong ROE of 36.3%. From this perspective, it is also very good.
Now for what you don't see:
CHPS is projected to have decreasing earnings when looking ahead for the next 5 quarters. Specifically, the company is expected to have their revenues decrease by 36.7% for the next 5 quarters.
Reflecting this negative trend, 3 insiders sold a considerable number of shares, selling about 77,000 shares in mid-November before the stock took a good beating. Major shareholders are selling out as well: 6 institutions recently sold shares vs. 3 that bought. On net though the 3 outbought the 6 that sold by 2 to 1. You may interpret that as you wish. Top small cap funds are buying across the board, however. But the most important ownership in my eyes are the ones done by the major executives. The insider ownership of the company is puny, at around 2.5%, which leads me to believe that management no longer serve the same interests as the shareholders.
So there you have it. By coincidence(?), the chart has formed an ascending triangle. Balance sheet info looks good, but looking ahead the company is expected to meet troubled waters. Major shareholders and insiders have sold, and the insiders who run the company show little faith in the company, as evidenced by the tiny stake they hold.
My research would lead me to pass up this company, for there are many others that have a brighter future, along with a management team that is more dedicated to shareholder value.
Regards,
Rainier Trinidad |
