Although I love strong stock charts and superior performance, I also worry about valuation. I have had valuation paranoia ever since the dot.com bubble. What do I have to pay for this maker of drone parts?
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With a forward PE ratio of 18.8 and an estimated five-year growth rate of 15% per year, I am currently paying a slight premium to the growth rate. The PEG ratio comes in at 1.25. It's hard to ignore that chart and performance, however.When I calculate a five-year earnings estimate and apply a reasonable multiple, I come up with a target price that is about 75% higher than where the stock trades today. Not bad, but I like 80%-100% upside potential. It is hard to argue with that chart and performance, however. Transidgm is a mid-cap stock that is headquartered in the drone capital of the world, Cleveland, Ohio. I wonder if the Patriots will have any drones flying over the Browns' football practices this coming year? Data from Best Stocks Now App I like mid-cap stocks right now. Not only are equities a leading asset class, but domestic mid-caps in particular are a very good place to be. Data from Best Stocks Now App When I weigh it all out in my mind and apply my formulas to the chart, the performance and the valuation, I come up with a stock that earns a grade of "A" and ranks #72 out of 3,278 stocks. At the current time, clients at Gunderson Capital Mgt. have no position in the stock. I have my antenna up, however! Data from Best Stocks Now App
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