Q: Could I have your opinion on HME please. Is it in your Income Portfolio as mention on October 15 post? If so I am not seeing it...
Many thanks!
Many thanks!
5i Research Answer:
HME was added to the income model portfolio on October 9, and this is why it does not appear in the latest September income model portfolio update. It will be reflected in the next month's PDF.
We like HME, it is an oil company with assets located in southeastern Alberta. Its balance sheet is solid, debt-free, and it generates a lot of free cash flow and returns most of this to shareholders through quarterly dividends, special dividends, and buybacks. Sales growth has been decent, margins are improving significantly, and it trades at a reasonable valuation of 8.0X forward earnings. It is a small name, but we think it has potential, particularly if the price of oil rebounds.