Do you prefer PWR or POWL and why ?
Also VHI seems to be one of your top picks for small cap growth stocks but the valuation ie P/E seems quite high . Does its growth rate justify the valuation ?
Thanks
Bill C
PWR is a much larger company ($53B market cap vs. POWL at a $4B market cap), and over the past 10 years POWL has returned a 26% CAGR while PWR has returned a 30% CAGR. PWR is expecting to see stronger sales and earnings growth in the next year, and given its relatively larger size, stronger historical price appreciation, we would prefer PWR here. Although, for a higher risk, more volatile name with likely more upside, we would prefer POWL.
VHI does have a high valuation, but it is at an inflection point with its earnings, and analyst estimates for its sales are trending significantly higher. Its margins have flipped positive, it is now seeing operational efficiency come into play for its business, and if it can continue to grow its sales we feel that it can perform well and see its valuations come down over time.