Q: GWO is approaching a new all time high. Is this a good thing or is the valuation getting stretched and is it a time to sell?
5i Research Answer:
GWO is expected to report earnings next Tuesday, and with a strong year-to-date performance of ~+27%, we would be somewhat cautious heading into earnings. It has beat its previous two earnings, and another beat is certainly possible, however, its forward earnings of 10.8X is approaching its 10-year average of 11X, and it's possible that expectations for good earnings have been priced into the name. If GWO beats estimates and raises guidance, we would feel more comfortable entering in here, and largely we would prefer to wait until earnings to assess if the company's current valuation is reasonable.