This week’s trade is PennantPark Investment Corp. (PNNT).
Fundamentally, this is a play on the rising interest rates in the U.S. With the expectation of two rates within the next 6 to 9 months, investors are starting to toward PNNT. Below is a brief outline of PNNT. Technically, the drawing card is the breakout after 18-months of consolidation.
Company Profile: PennantPark Investment Corporation is a BDC whose objectives are to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments primarily made to U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. The company believes middle-market companies offer attractive risk-reward to investors due to the limited amount of capital available for such companies. The company seeks to create a diversified portfolio that includes first lien secured debt, second lien secured debt, subordinated debt and equity investments by investing approximately $10 million to $50 million of capital, on average, in the securities of middle-market companies.
Trailing P/E: 8.76, Forward P/E: 10.05
EPS: $0.74, 36-Month Beta: 1.20
Revenue Growth YoY: -12.35, 5-yr. Avg. Revenue Growth: 1.89%
Trailing Annual Dividend: 9.57%, ROA: 7.24%
P/B: 0.84, Debt-to-Equity Ratio: 0.76
Additional Fundamental Data: https://www.nasdaq.com/symbol/pnnt & https://www.theglobeandmail.com/investing/markets/stocks/PNNT-Q/
The stock has just broken out of an 18-month consolidation
New 52-week high
New all-time high
Buying momentum (RSI) is near an overbought reading. Currently at 69.53
Buying volume is neutral
1st support is at $7.30
The safety stop is at $7.04
The target is is $8.80
Suggested Buying approach: As PNNT is almost overbought, buy a half position now. If PNNT pulls back, as long as the level is above the safety stop, wait for confirmation of support and then add to the position, if desired. Always use a 3% trailing stop.
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