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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I have held PBH in my cash account for sometime and am up a paltry 6%. I'm considering selling and replacing with either LLY, HD or TRI. Looking for greater growth and willing to take on moderate risk. 3-5 year hold. I know these companies are apples and oranges, but I would appreciate your views on risk and reward for PBH, LLY, HD and TRI and which you would recommend I hold going forward. Thank you.

Asked by Maureen on February 16, 2024

5i Research Answer:

PBH is currently going through a capital investment cycle, and free cash flow could return meaningfully as the investment cycle is completed. PBH is currently trading at PBH 17.6x Forward P/E, which we think is attractive compared to historical averages. TRI and LLY are decent performers given the solid growth in the last few years. Valuations are expensive, but if one is looking for growth we think both look better than PBH right now. HD is a high-quality home improvement retail name, but growth over the next quarters could be bumpy as consumers slow down spending on large ticket items, but over the next 5 years should do okay. But slower growth than LLY/TRI, certainly.

Overall, we like them all. We would be fine keeping PBH, but if one really wants to shift to growth and a much larger company, LLY would be our pick today.

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