DRX is a small-cap service provider for the construction industry and is now trading at 8.4x times' P/E. The company’s revenue growth is quite cyclical, but has had a positive trend over time: on average revenue growth was around 9% in the last five years. The balance sheet is strong with net cash of $2.1M. The company also pays a small dividend, which is likely sustainable given the strong balance sheet and ample cash in the trailing twelve months. Overall, an decent name, and the stock has done very well, with better-than-expected results. But there is size risk and cyclicality risks (negative cash flow in down years), and as a small cap is not for everyone. But it is priced right and for small caps it has many positive attributes.
5i Research Answer: