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Bill Gunderson's Radio Play of the Day: My Favorite Drone Stock

Stocks in this article: TDG

Although I love strong stock charts and superior performance, I also worry about valuation. I have had valuation paranoia ever since the bubble. What do I have to pay for this maker of drone parts?

Data from Best Stocks Now App

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

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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