Q: Happy Labour Day 5iTeam,
I would like to get exposure to copper and wonder if you have to choose between these 2 companies, which one would you pick and rationales for your choice.
Cheers,
H
I would like to get exposure to copper and wonder if you have to choose between these 2 companies, which one would you pick and rationales for your choice.
Cheers,
H
5i Research Answer:
LUN is trading at 12x Forward P/E, and LUN has net debt of only $225M and net debt/EBITDA is at 0.3x. LUN also pays a dividend and occasionally repurchases shares. CS is trading at 15.5x Forward P/E. CS has reinvested heavily back into the business to pursue growth. CS’s debt level is thus high, with $935M in net debt and net debt/EBITDA is around 6.0x.
Between the two names, we would side with LUN due to its stronger balance sheet, lower valuation and more shareholder-friendly policies. But we do think CS is fine for growth.