Tuesday, November 23, 2010

FTR Watch

Frontier Communications Corp. (FTR) is one of the grab-bag of dividend-paying stocks that I added recently to the income-play section of my Watchlist. It goes ex-dividend on a 18.75¢ quarterly payment on Dec. 7, and moved to bull phase on Person's Proprietary Signal (pps) last Friday.

I'll say up front, a growth stock it ain't.

ppspsarmacd obvh-a trend ma20ma50ma200
FTR $9.05

The return on equity is a miserable 3.8%. The debt/equity ratio is a ridiculous 1.55. The institutional ownership is, if not exactly low, only a smidgeon above 50%.

The main thing this rural telephone company, the largest in the United States, has going for it is a socko dividend of 8.28% and a price rise that has persisted since last July.

The price rise began as the company, on July 1, announced it had completed a massive purchase of landlines in 14 states from Verizon.

So clearly, traders -- a forward-looking bunch -- are pricing in the profits from those new assets. It's speculatively, but perhaps FTR can be called a growth stock aborning.

On the Person's table, the price is trading at the weekly midline.

Person's Table
ppspps openupper pivotlower pivot
FTR $9.05 $9.08 nov19 $9.39 +3.8 $8.95 -1.1

The price has about 4% to go before encountering upside resistance, in the form of a swing high set Nov. 9.

Reversal Levels
  • $9.42, +4.1% (swing high)
  • $9.05 --- You are here.
  • $9.00, -0.6% (20-day moving average)
  • $8.84, -2.3%

Since the July 1 announcement of the Verizon deal, the two ex-dividend dates have had no persistent downward effect on prices. To the contrary, prices have risen every month since July, it be a dividend month or not.

For my own account, I've bought the stock in order to capture the dividend, and with a reasonable expectation that the ex-div price hit will be fleeting.

Generally, for dividend plays, I like to follow the more slow-moving weekly indicators for my entries and exits. However, the financials for FTR are rotten enough that I am likely to jackrabbit on any reversal in a principal signal on the daily chart.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

  • h-a trend - Heikin-Ashi trend.
  • obv - On-Balance Volume.
  • pps - Person's Proprietary Signal.
  • psar - Parabolic Stop and Reverse
  • ma20 - 20-day moving average
  • ma50 - 50-day moving average
  • ma200 - 200-day moving average
  • macd - Moving Average Convergence-Divergence

About the glance: The colors indicate the state of each signal.
  • Signal Section:
    • pps, psar, macd: green for bull mode, red for bear.
  • Confirmation Section:
    • obv: green for uptrending, red for downtrending.
    • h-a trend: green for uptrending, red for downtrending.
  • Environment Section:
    • ma20, ma50, ma200: green for above the average, red for below the average.

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