Q: I try to keep 5i’s guidance on when to sell a stock in the back of my mind whenever I am looking at my holdings. Do you feel either of these two meet enough of the criteria to warrant selling? For instance I see commentary that (future) competitive landscape for NTR may have shifted materially with massive new supply entering the market? And notwithstanding recent DSG comments, it feels like something has changed? I appreciate your thoughts.
5i Research Answer:
The fertilizer supply issue has gotten a lot of press, but it will not impact the market for some time. Short erterm moves will still be dictated by China and contract prices. NTR is up 22% YTD and its very low valuation we think reflects the situation. It will always be cyclical but we would not view it as a SELL.
DSG has been disappointing, but 20% growth is expected next year and it remains debt-free with $176M cash. Some are concerned about a threat from AI but it is developing its own solutions using AI. It needs to be watched, and is not the 'easy trade' it has been for the past five years, but we would not see it as an outright sell at this time.