CIG is in a nosedive, do I buy more or bailout?
Looks like we’re in wave 2 on the weekly chart.
Sean, could you elaborate on how high you'd like to see CIG's cash position. What factors weigh the most in that analysis?
Their debt being bigger than their market cap, presently, is my bigger concern. However, a push higher in the stock price can remedy that over time. I'd be more comfortable if they had $1 billion in cash. That's asking a lot for a $3 billion market cap company for sure, but also they have over $4 billion in debt. Their low forward P/E of 7 and their earnings of $1.34 billion are nice too. So considering the latter info and the a-b-c downtrend break, rising 50-week moving average and likely being in a wave 2...wave 3 could be coming and the stock could rise a lot (with a forward P/E of 7) before it got fundamentally overstretched in price. Additionally, it's bottom is likely in place ever since early 2016. But remember, pessimism doesn't let up until long after the bottom is put in. People are slow to realize when a stock makes its turn. It's why the point of maximum pessimism can come on wave C's but can often come towards the bottom of wave 2's as well.
Taking all that into consideration, how high do you estimate CIG to get to?
There's no reason why CIG can't make it back up to the $7's.
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