The stock has been weak recently and is now trading at $73, below the recent secondary issue at $74.25 and $9 below its recent high of $82. The decline could well be market related, with DOW and Industrial Sector under pressure, the whole week and not really company specific - Don't know.
At the same time, ADF Group is hitting new highs, almost every day, ignoring the weakness in the Industrial Sector, in general.
Both these companies are on your recommended list. Also, my understanding, based on your investment approach is that you would rather add to a position with stock seeing strong momentum than average down when a stock is in a downwards trend.
Not sure, if the recent price action makes one of the two stocks better than the other, but if you have $$$ to add, which one will you choose today and why ?
Thank You
The capital allocation strategy at TVK has always been that way. Low organic growth profile companies being acquired at attractive valuations. TVK has been an active user of debt of M&A over the years. The majority of growth is driven through acquisitions. TVK’s story has been largely unchanged, which may or may not fit investors’ appetite for serial acquirers. The weakness in TVK’s share price could be due to the secondary offerings along with a large insider sell and a weak overall market. It is hard to predict short-term volatility in share prices.
DRX has been on solid momentum, but remains cheap at 12X earnings, even with recent gains. The valuation is near the high end of its historical range, but growth has accelerated recently. The backlog is strong. It remains in a net cash position and we continue to like its prospects, with decent growth expected for the balance of 2024 and 2025.
We are okay to add both here, as we don’t think there is too much overlap between the two businesses, but if we HAVE TO pick one, we may side with TVK today.