Tuscany International Drilling Inc. (TSE:TID) (PINK:TIDZF) stock price has reached a critical level on its way down and started exhibiting signs of a possible bottom out.
Trading volume topped 8 million on Friday when the price trailed somewhat up, and it was negligible on Monday when a further 5% drop occurred. This is a sign that the stock price is at a critical level and the support at 55 cents per share will not be ignored on the way down.
It might actually go into consolidation if this support holds, bringing an end to a prolonged downtrend. The 50-day moving average is nearly flat right now, which is yet another sign of the downtrend weakening.
The stock hit our radar because of the jump in trading volume. There was no important news recently.
Tuscany holds a market cap of $191 million, which is below their net tangible worth of $378.8 million. Such a valuation reflects the large quarterly net losses produced by the company. To date, Tuscany has been covering negative cash flows by issuing huge amounts of capital stock and debt.
Their stock dilution reached 78.5% since December 31, 2010. Of course, we should not bash the company too hard since half of the newly issued shares were meant for the acquisition of Caroil SAS which was finalized on September 15, 2011.
