CML , CML HealthCare Inc.

This stock trades on Toronto but has operations in both Canada and the US. It recently converted back to a normal corporation from income trust and has adjusted its dividend payout to a level that equates the previous distributions (that is for Canadian residents holding the stock outside a sheltered investment vehicle such as an RRSP.  It pays $0.75 per annum which at today’s stock price of about $9 gives a return of 8.33% (or after normal dividend gross-up around 11.75%). It is in the business of community based healthcare services. Doctors typically refer patients to these healthcare providers to have things like routine blood/urine and whatever other tests done. The results are simple e-mailed back to the doctors who do the actual diagnostics. Illnesses such as diabetics, high cholesterol , certain cancers, being overweight etc.etc. that are mostly diagnosed on the basis of these test promise an ever expanding clientele and at least in Canada it is mostly Government paid.

Here is the chart;

cml may 2011

This is the best chart I could get. It is from the company’s own website. The move from $10 to $17 is very obviously a B-wave, implying that the drop back down must be a C. In this case it looks and feels like a “contracting diagonal triangle”, or in English, a wedge. (think Ford). Typically these wedges retrace themselves entirely , that is once the low is in back to about $17.5.  The low should be at about $8.25 , but most times they do not get to the extreme; occasionally they exceed it. So where can you get a double and earn 8+% ?