Chorus Aviation could be ready to break out, this investor says

Chart watchers should be keeping an eye on Chorus Aviation (Chorus Aviation Stock Quote, Chart TSX:CHR), says portfolio manager and technical analyst Keith Richards, who claims that the stock will pop if and when it gets back above the $8.00 mark.

“I’ve looked at this stock a couple of times and I like the look of it technically,” says Richards, of ValueTrend Wealth Management, to BNN Bloomberg on Tuesday, “with the caveat that this stock has a pretty decent neckline at somewhere near $8.00 and it’s been tested and failed a few times.”

“So, this could be the beginning of some sort of a head-and-shoulders look,” he says. “Whatever you want to call it — and I don’t get caught up in however you want to name the formation — it needs to break $8.00 before I, personally, would enter the trade. It’s the safest way to trade it. If it does, you could be getting into the zone of $9.00 or $10.00.”

Chorus hit a three-year high of $9.86 in January 2018 before heading south and dropping as low as $4.54 this past December. It then climbed back to the low-$7.00 range, where it has been trading for much of 2019. The stock briefly touched a six-month high of $7.93 in late February.

“Fundamental people will buy not based on the chart. They say, ‘I like the value,’ so they buy it. But I would only buy it if it broke $8.00,” says Richards. “It could be just $8.10 and stay there for two or three days and then, boom, I would buy it. At this point, I have looked at it and I haven’t bought it.”

Ahead of Chorus’ first quarter results due next week, the regional aircraft leasing company passed a major milestone early in 2019, having firmed up in January its purchasing agreement with Air Canada, giving Chorus another ten years of service with its Jazz carrier. Last month, Chorus closed on its deal for six regional aircraft with Elix Aviation Capital, bringing its fleet to 40 aircraft, comprised of 28 turboprops and 12 regional jets and valued at approximately US $860 million.