Q: Hi, ATD has been quite a steady performer for years. Would you be comfortable starting a new position at current price ? If yes, would it be prudent to buy partially now and wait for the results to fill in the rest ? What is the growth trajectory for this co. and its stock, in your view ? Thank You
5i Research Answer:
ATD is often seen as a stock to hold during rough markets or rough economic times, but the markets are calming down and yet ATD continues to hit new highs almost daily. We do remain comfortable with the stock, but its 18X P/E multiple is about in line with the past 10 year average, and we think buyers have a bit of flexibility here. We don't like buying/selling based on one quarter, and would rather own a partial position now and fill on any weakness down the road. EPS is expected to grow 10% next year, with 6% to 8% following that. The past two quarters showed 20% and 26%, and we do think that torrid pace will slow a bit.