Q: What is your opinion on HPS.A - is it a worthwhile investment for the long term - is it well run?
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5i Research Answer:
HPS.A pays a small yield of 1.2%, has grown its sales nicely over the years and has demonstrated a strong expansion in margins, and analysts are expecting continue growth over the next few years. It's a fairly small name ($598M market cap), with very little debt, a cheap valuation (10X forward earnings), good free cash flow, and a growing balance sheet. Its backlog is growing and management has executed well. We think it has good potential from here, and we would be comfortable with a position here while being mindful of its small size risks and position sizing.