Q: Results yesterday from CPH and DR both looked excellent and the stock prices have moved up significantly in response. They both look cheap, particularly CPH, even more so if you ex out the $2.20 cash on the balance sheet. What do you think of these as part of a small cap portfolio?
5i Research Answer:
CPH is really starting to put things together and still looks good at 14X earnings. EPS is expected to decline this year but as noted the balance sheet is strong as is free cash flow. We would be comfortable owning it. DR is cheaper at 9X earnings, and doing fine, but we see it as less interesting for growth potential (still OK for income overall). 2023 was very strong for it. Both companies have had issues in the past (missing earnings, slow growth) but both are hitting their strides now. As part of a small cap basket we would be comfortable with both.