Technical Speculator.com’s Trade-of-the-Week: PennantPark Investment Corp. (PNNT)

By Tech_Spec
3-August-2018 9:21:28 PM
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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.

Key Fundamentals

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/

Key Technicals

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.

More trading ideas and investment research is on www.technicalspeculator.com

 

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Author: Tech_Spec

Canada’s only Master of Financial Technical Analysis (MFTA). This 4 – 5 year program offered by the International Federation of Technical Analysts (IFTA) in England is regarded as the global standard. • Instructor of Technical Analysis for the Canadian Securities Institute (CSI). My role is teaching market analysis to industry professionals. • Financial Technical Analyst offering 25 years experience in the financial and investment service industry. • Editor and owner of the Technicalspeculator.com, an on-line independent financial market research and newsletter website. • Registered Securities Advisor

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