Q: Would you wait to initiate a position in these stocks? Or do you feel this is a good entry point?
5i Research Answer:
PRL trades at a good valuation of 10.6X forward earnings, and although its price has increased significantly in the past few months, it has tended to move higher, then consolidate sideways before its price expands again. This type of price action typically means accumulation, and there have not been many 'dips' for buying. It does report earnings in a couple of weeks, but we would be comfortable accumulating here.
DRX has been flying higher, but it has no analyst coverage, and despite its rapid price rise, it continues to trade at a cheap valuation of 11X forward earnings. This name is growing faster than its price is, and we would be comfortable buying here. We have recently added a 1.5% position to the growth model portfolio.