Q: Hi team, I bought WELL.CA back in Nov 2021 in my TFSA to provide some "growth" after viewing in your 5i Growth model portfolio. I am down ~38% and still waiting for the "growth" to take place. I realize it must have been bought in your growth model portfolio back around May 2020 at $2.83 so you're still up 30%. Back in April of this year it looked like there was some promise to the stock but it has since headed to the basement again. You still promote WELL so I'm wondering if I should hang on to this loser (for me) or wait it out? If a sell, what to replace with. I hear rumblings that small caps may take off in 2024? Appreciate your thoughts. Bill
5i Research Answer:
Small caps, relative to large caps, are very cheap on a valuation basis. They 'should' do better with lower rates, but of course that could have been said earlier as well. But..small caps rose an average 10% in November, showing the leverage they have when things actually go well. We still consider WELL one of the better small cap prospects. The 2020 drop was partially related to the covid-slump, as many such names ran up in covid and then retreated. But an examination of the fundamentals looks better: Revenue has tripled since 2020 and the company has gone from losses to (decent) profitability in that time. We would be comfortable giving it more time to perform.