Q: I would like to invest in the space, how would you suggest allocating between these linked companies based on risk and reward?
5i Research Answer:
We think AIDX has some attractive features, but we are cautious with it due to the small cap risks and volatility it has displayed. It has seen negative momentum since mid this year, and while it is unprofitable, sales growth has been and is expected to be strong. We would prefer to wait until price support is found, as its negative momentum is currently weighing on the stock.
WELL, on the other hand, has solid fundamentals, is profitable, expects strong forward growth metrics, and has a reasonable valuation of 16X forward earnings.
We would be much more comfortable with WELL over AIDX today, while still acknowledging WELL's small-cap risks.