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Premium Brands Holdings Corporation (PBH)
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Hammond Power Solutions Inc. Class A Subordinate Voting Shares (HPS.A)
Q: Good Evening
I am a long time holder of Premium Brands, have always liked its prospects but have grown impatient with the stagnation in stock price. Considering a move to Hammond but wonder if I have missed out on the run up in price. Would you endorse the switch or have another suggestion. When I have made these types of decisions in the past many times patience would have been the best move.
Thank you
I am a long time holder of Premium Brands, have always liked its prospects but have grown impatient with the stagnation in stock price. Considering a move to Hammond but wonder if I have missed out on the run up in price. Would you endorse the switch or have another suggestion. When I have made these types of decisions in the past many times patience would have been the best move.
Thank you
5i Research Answer:
We like both companies to be clear, and would love to own both. However, these are not apple-to-apple comparison, as both companies have vastly different risk/reward profile, business. PBH operates as a predictable consumer staple business with attractive dividend yield and dividend growth. On the other hand, HPS.A operates as a electric equipment provider, still growing at healthy pace, and trading at a reasonable valuation, but it is more cyclical. We would keep PBH, but if we have new cash, we would add to HPS.A
HPS.A is still trading at 18.7x Forward P/E, based on consensus estimates, sales are expected to grow by 10% over the next few years, which we don’t think is expensive here.