Good time to start a positionFundamentals
If you look into their quarterly statements it is indicated that the Canadian government has been providing a lot of aid during this crisis such ass PPE's wage top ups and government assistance that allows the frontline workers to take sick days with pay , which is great in minimizing the impact on the operational costs. Moreover, here is a quote from the latest statement from august 13. "Average occupancy dropped to 93.5% in Q2 2020, down 400 bps from Q2 2019 and 350 bps from Q1 2020, mainly
driven by reduced admissions as a result of COVID-19. Despite lower occupancy levels, our revenue base is largely
protected as full funding is preserved in Ontario until December 31, 2020. Alberta has introduced additional
funding for COVID-19 costs, which includes an allocation to address occupancy reductions and we expect similar
protocols to be followed in other provinces. "
How I interpret this statement is that
They have just submitted an application on building building 4200 new c beds to replace their existing 3247 in their long term care department. The ontario government has also announced a capital subsidy funding for the redevelopment 12000 beds and add 8000 beds over the course of 5 years.
Covid cases has been kept very minimal with only one out of their 69 facilities had an outbreak ( a very loose term where just one person having it triggers it). In short, I believe the canadian government whether if they are NDP or Liberal will aid in the funding for senior care especially since they are the focus as they are they most vulnerable disease, which I believe gives the investors some a lot of protection for their dividends of 8.7% as I write this. As a healthcare worker, i believe protocols in minimizing the spread of covid, atleast in these facilities are fairly straightforward.
Currently it is priced at 5.54 while heavy insider buying can be seen from 5.60 to 6.30.
Technicals
As we can see it is sitting inside a pennant and for the reasons I listed above I have a bullish biase in this indecision area, of course if the market tanks this week, that could mess this up. On the 2 hr we can see bullish divergence on the RSI as well as priceaction just bouncing off support. There is some bullish divergence on the macd histogram with a bullish crossover about to occur. For extra confirmation we may look for a line break on the SMI . And finally a bit of bullish divergence on the William r which can be seen better on the 1 hr. 5.8 is the conservative target but for the reasons listed above this may be great investment opportunity
