Q: Hi, Can you please provide your opinion on current valuation, growth prospects and a decent entry level to start a new position? It was mentioned that stock has seen a run up in its price and may need to consolidate. Actually, just within last 10 days, it has shot up almost 10%, since it was added to 5i Growth Portfolio ( Kudos to your team for the Great selection and Excellent timing !!! }. Thank You
5i Research Answer:
HPS.A is a small company ($682M market cap) that pays a yield of 1.1%, it has grown its sales nicely over the years and has shown solid margin expansion. It has very little debt, a cheap valuation (12X forward earnings), good free cash flow, and a growing balance sheet. Its backlog is growing and management has executed well. We would like to see it break through its 52-week highs (~$63), particularly after earnings (next Thursday, Oct 26). We feel its current price of $57 or ~$55 provides a good entry price.