# CGI Group (TSE:GIB.A)



## james4beach (Nov 15, 2012)

This thing has a beautiful multi-year chart. Currently it's fallen down to the 200 day moving average, and sometimes stocks will retrace to their 200 day averages before continuing their advances.

Anyone thinking of buying some here around $34.37 ?

I don't own any


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## james4beach (Nov 15, 2012)

Here's a link to its chart


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## Canadian (Sep 19, 2013)

Downward momentum has slowed but I think we need a bit more time to better determine if it should bounce or not.

In the attached picture you will see the green lines I drew:









Over the long term [multi-year, not shown in this picture], the stock has been in a solid uptrend. There are mixed messages over the past 6 months, though. The stock was experiencing higher highs and higher lows until about December 23rd. The trend broke around this time where I note an established lower high and lower low. This could be a short term blip but I think the deciding factor will be whether the stock climbs above about $36 dollars. I estimate $36 will be the new short term resistance or support, depending on if the breakout occurs soon.

To your buying comment, james, I think the stock could dip slightly below $34 before the short-term breakout mentioned above.


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## james4beach (Nov 15, 2012)

I agree on waiting a bit to see how the technicals develop. I'm thinking around 75% odds it continues its uptrend based on the current view, also that there's no particularly high volume selling currently. Your thoughts on likelihood the uptrend continues?


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## GoldStone (Mar 6, 2011)

I assume you saw this:

U.S. to part with contractor CGI for Obamacare website
http://www.reuters.com/article/2014/01/10/us-usa-healthcare-cgi-idUSBREA090Y520140110

If I were to invest, I'd want to understand how material the loss of Obamacare contract is. The impact on earnings, etc. This seems more important than chart technicals.


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## james4beach (Nov 15, 2012)

Sure, it's worth looking into how much of earnings come from that program.


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## doctrine (Sep 30, 2011)

It's a $90M/year contract. Give them a 25% net profit after everything incl taxes, and its worth $22.5M of net earnings; at their current multiple of 24 thats $540M of market cap or 5% of the company's total. Given that the stock is down 2.5% today and 18% from its 52 week high, arguably the price is now built in. There could be further fallout if they're not able to land other contracts, though. Probably that is the reason for an 18-20% drop vice just the 5%. For me, the P/E is way too high for an entry point either way.


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## james4beach (Nov 15, 2012)

I never try to trade around news releases; a huge number of people (and computers) have seen and analyzed the news before you even see the headline


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## Canadian (Sep 19, 2013)

GoldStone said:


> This seems more important than chart technicals.


I agree that fundamental changes are more important and can easily break technical trends. I don't follow this stock so my comments are purely based on the chart.



james4beach said:


> Your thoughts on likelihood the uptrend continues?


Over the long term, I'd say there's a pretty good likelihood of the uptrend continuing. Over the short or medium term, I'm speculating that it can go either way, but I think there will be some downward pressure before any breakout. I looked at the chart you posted and noticed the positive and negative volatility timeframes are decreasing. The cyclical uptrend is pretty consistent and smooth up until July. Since, the highs and lows have traded in a smaller range and over shorter time cycles. To me, that indicates that the technical trend is losing its fizz [maybe because of the news, or other fundamental indicators I haven't looked into]. Volume since September has also been abnormally high - this could distort its consistent technicals. After spending more time looking at the chart I am going to change my prediction of the new price floor/ceiling from $36 to $34. I'll need time before I can add more to this prediction or see if my current one is on track. The impact of the contract can and probably will play a big part in the deciding factor.


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## CanadianCapitalist (Mar 31, 2009)

FYI:

Accounting for Obamacare: Inside the Company That Built Healthcare.gov



> On Wall Street, there’s an entirely different sort of controversy brewing about CGI. Several smart investors—including well-known short-seller Jim Chanos, who runs Kynikos Associates—are betting against CGI, or shorting its shares, not because of the quality of its work but because of questions about its earnings. In September, Deutsche Bank analyst Bryan Keane downgraded CGI to a rare “sell” rating, citing quality-of-earnings questions. What he and others point out is that a number of questionable accounting tactics could be creating the illusion that CGI’s business is far more successful than it actually is. After the news broke in Newsweek that Chanos was shorting CGI, its stock fell more than 12 percent, although it’s begun to climb again.


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## maxandrelax (Jul 11, 2012)

It continues to be on TD's Action Buy List. The healthcare issue put a damper on things but it is a fraction of their business.


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## leeder (Jan 28, 2012)

I believe this stock is trading cheap relative to the Canadian tech space. They also have a plenty of cash and generates a pretty good cash flow. Hope they do something with it, such as pay down debt, continue to make acquisitions, and/or institute a dividend (dividend seems unlikely based on interviews with CEO).


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## james4beach (Nov 15, 2012)

james4beach said:


> This thing has a beautiful multi-year chart. Currently it's fallen down to the 200 day moving average, and sometimes stocks will retrace to their 200 day averages before continuing their advances.
> 
> Anyone thinking of buying some here around $34.37 ?


It wasn't picture perfect or anything, but you can see in chart that it did more or less bounce off its 200 day simple moving average. Another example of that happening is with AC.B

If you had bought each the first point (in 2014) they dropped to their 200 days, would have been
GIB.A @ $34 ... now +12.9%
AC.B @ $5.20 ... now +45%

I'll stress I would only do this for short term trading. I haven't had the spare money for stock gambling though, so I haven't done any of this.


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## PatInTheHat (May 7, 2012)

I bought the US ticker for $30.74 a little over a month ago. Up 12%, one of my few purchases working out.


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## PatInTheHat (May 7, 2012)

Excellent earnings. I'm considering cutting a bit here being up 20% and looking pretty over bought.

EDIT: Peeled off 3% before close, I didn't make a move. Holding now.


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## james4beach (Nov 15, 2012)

GIB.A is hitting new all time highs again. I bought it at $69 at the end of 2017 and it's performed very nicely since then. I still hold it within my growth portfolio (relatively small position)

5 year performance is 21% CAGR
10 year performance is 24% CAGR


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