Q: I have been thinking of replacing PKI with EIF in my RRIF over the last few months. During this time PKI has been steadily rising ( in a weak/ declining market) while EIF has been following the market down. The EIF decline has been quite substantial from what I see is a strong company with good prospects. Is there something wrong with the company that us retail investors don’t know about. ? Is there a rerating of the company going on ? Several analysts have been more positive on PKI. Should one expect strength in this stock to continue. ? Trying to figure out when ( and if ) I should make the switch. My gut says to wait this out. Your thoughts are appreciated. Thanks. Derek.
5i Research Answer:
We do not think anything is 'wrong' at EIF. Business is good, but it is a small company in a higher rate environment with recession fears pervading. PKI, meanwhile is getting some attention as an activist investor gets involved with the company (comments posted on this today). EIF is cheaper, and offers a higher yield. Generally speaking, we do like it 'more' than PKI, but PKI could do some things to further improve valuation (though it may not). We agree that we would ride PKI momentum a bit longer here.