Ainsworth Lumber Co. Ltd. (TSE:ANS) recorded a breakout by the end of Wednesday’s trading session, securing a 9.6% gain for the day.Breaking through a major resistance at $3.80, the stock pulled in over 2.3 million trading volume, which was roughly 16 times the average. The recent price action pointed out a clean breakout, but clearly the stock had some large stake sellers at higher prices, causing a “morning panic” sell-off early into trading on Thursday.
Trading volume was one of the heaviest recorded for the last three years. The breakout would resemble a similar situation that unraveled slightly less than a year ago, when the price shot up from $2.25 and topped after touching $5.89.
The closest worthwhile resistance from that time is at $4.50, a round number which is mostly valid as a psychological figure. $3.80 now serves as a support – the level held pretty well today after the panicking sell-off in the morning, showing a lot of new buyers are pouring in to profit from the rally.
Nearly three weeks ago the company announced improved quarterly and year end results, which caused price consolidation at the time and followed up with the current breakout.
Main highlights on year end report for the oriented strand board (OSB) manufacturer:
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Annual sales increased by 15.2%;
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Cash position remained at strong $67.6 million;
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Booked an annual net profit of $9.4 million, bringing the bottom line to black for the first time in 5 years;
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Managed to acquire the remaining 50% of Footner OSB mill at lower cost, and now own 4 mills in total.
