Investment Q&A

We have held GDI in the growth model portfolio for a long time, with a start price of $18, and we continue to like the name. GDI's business is highly recurring, but growth has slowed meaningfully in recent quarters, leading to its share price sliding over the past couple of years. With weakening sales growth, its valuation is fairly expensive at 31X forward earnings, and in our latest report we mentioned we are open for a future downgrade if acquisition activities do not improve or organic growth continues to slow down. We do not like the trend, but if we see earnings and sales bottom in any of the coming quarters, this can help support its share price, and lead to an eventual recovery.

While we continue to like GDI as a long-term hold, given its recent weakness and negative trend, we would prefer a strong industrial name such as HPS.A, TVK, or WSP.