TechnicalSpecular.com’s Trade-of-the-Week: Gladstone Investment Corp (GAIN)

By Tech_Spec Forbidden
15-April-2019 1:24:01 PM
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This week’s trade comes from the financial sector, asset management industry of NASDAQ.  Several highlights that caught our attention were the low trailing P/E multiple (4.01) and the high dividend yield 6.81).  The profit margin of 171.29% and the return on equity (ROE) of 26.98% is also noteworthy.

Company profile: Gladstone Investment Corporation is a private equity fund specializing in lower middle market, acquisitions, mature stage, buyouts; recapitalizations; refinancing existing debt; senior debt securities such as senior loans, senior term loans, lines of credit, and senior notes; senior subordinated debt securities such as senior subordinated loans and senior subordinated notes; junior subordinated debt securities such as subordinated notes and mezzanine loans; limited liability company interests, and warrants or options. The fund does not invest in start-ups. The fund seek to invest in manufacturing, consumer products and business services/ distribution sector. It seeks to invest in small and mid-sized companies based in the United States. The fund prefers to make debt investments between $5 million and $30 million and equity investments between $10 million and $40 million in companies. The fund seeks to invest in companies with sales between $20 million and $100 million. The fund invests in companies with EBITDA from $3 million to $20 million. It seeks minority equity ownership and prefers to hold a board seat in its portfolio companies. It also prefers to take majority stake in its portfolio companies. The fund typically holds its investments for seven years and exits via sale or recapitalization, initial public offering, or sale to third party.

 

Fundamentals:

Trailing P/E: 4.01, forward P/E: 15.46

PEG: 7.15, Beta: 0.73

P/S: 6.88, P/B: 0.99

Profit margin: 171.29%, Operating margin: 37.96%

ROA: 2.33%, ROE: 26.98%

Gross profit: 58.35M, Qrtly earnings growth: -3.80%

Current ratio: 0.46

Additional fundamental data: https://finance.yahoo.com/quote/GAIN/key-statistics?p=GAIN

 

Technicals:

Recently broke out of a 9-month consolidation

New 52-week high, New all-time high

Buying momentum (RSI) is positive and rising

Buying volume is neutral

1st support level is at $11.50

The safety stop is at $10.73

The target is $14.25

Suggested buying approach: Buy GAIN at the current price level.  If the stock pullback, as long as the price is above the stop level, waits for confirmation of support and then add to the position if desired.  Always use a 3% trailing stop.

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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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