Bargain Play: American Capital Ltd.

by Sam Collins   08/19/08
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American Capital Ltd. (ACAS) -- This business development company (BDC) specializes in management and employee private equity buyouts, acquisitions, recapitalizations, mergers and acquisition, etc.


It broke its bull-market trend line in late November and crashed with many other financial service stocks, falling from a high of almost $50 to just under $16. But at $16, ACAS appears to have flashed a selling climax and a strong buy from our internal indicator Collins Bollinger Reversal (CBR).

It is not usual for me to follow a stock with a broken chart but the weekly chart of ACAS shows the strong possibility of a double-bottom off of a prior low in late 2002. A dividend of $1.10 per quarter is assumed (though it could be higher), providing a yield of more than 20%.

A solid bounce could take ACAS to $30-$35. Bottom-fishers may want to position this stock.


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