Q: Hello 5i. I'm looking add a new growth position in a registered account, 3-5 year horizon, sector not a factor. PRL appeals for its momentum and valuation, GIB.A for its valuation and it sector, for which it seems very undervalued. They are apples and orages but which would you go with today, for growth? Thanks.
5i Research Answer:
PRL has demonstrated great execution in recent years, as growth continues to be solid (FY2023 growth was around 30%), with a Return on Equity (ROE) of 30%. This is a high-quality name, which is currently trading at a cheap valuation of 10.4x Forward P/E. For more upside potential, and for those looking for a small cap, PRL would be our pick. That said, GIB. A is a consistent compounder with moderate growth and buyback over time. It is much much larger, and likely safer, so much depends on investors' goals here. For pure growth we would side with PRL today.