Q: Hi 5i Research team,
Follow up questions on KITS: based on transaction volume, what would the maximum number of shares you would recommend owning? In your answer you mention that KITS is expensive (good companies usually are): with what multiples would you consider it fairly valued? What impact would you expect a recession would have on sales growth? My intuition tells me that contact lens and glasses are more staples than discretionary: would you agree? Thank you for your collaboration, Eric
Follow up questions on KITS: based on transaction volume, what would the maximum number of shares you would recommend owning? In your answer you mention that KITS is expensive (good companies usually are): with what multiples would you consider it fairly valued? What impact would you expect a recession would have on sales growth? My intuition tells me that contact lens and glasses are more staples than discretionary: would you agree? Thank you for your collaboration, Eric
5i Research Answer:
If an investor was not intending to trade, we would consider 20,000 to 25,000 shares as a general size limit. Because KITS is growing, P/E on 2025E earnings is 72X. 30X might be 'reasonable' but it is not likely to get there while growth is high. It gets a management premium thanks to their prior successes. We do think a recession would have a bit of impact. While eyecare is less so, accessories and high margin items probably are.