Q: Greetings,
ZDC
1) The inclusion price into the 5i portfolio was $2.15 so congratulations on that pick!
However, has ZDC run out of steam or would you say it's temporary?
2) Do you think inclusion into a 5i portfolio immediately adds momentum to a stock?
3) Am I missing something but it seems to me, the company is a "one trick pony" with not much of a moat. What's the appeal here?
Many thanks!
A
ZDC
1) The inclusion price into the 5i portfolio was $2.15 so congratulations on that pick!
However, has ZDC run out of steam or would you say it's temporary?
2) Do you think inclusion into a 5i portfolio immediately adds momentum to a stock?
3) Am I missing something but it seems to me, the company is a "one trick pony" with not much of a moat. What's the appeal here?
Many thanks!
A
5i Research Answer:
1) Hard to say. The reaction to competition was harsh, but in our view ANY good industry is going to get competition and it is not something to panic on. Small caps inherently are volatile and recent moves are common. We would see it as temporary but of course could be wrong.
2) We have a good following, but ZDC is a $600M company and we would not really expect a giant '5i impact' on portfolio moves.
3) Moats are hard to establish. Reliability and performance and customer execution are helpful. It may not have a technical moat. But, it is a growing market and sales have tripled from 2024 to this year's estimates. It is doing something right, certainly. EPS leverage on new sales is high as fixed costs are covered.