NEW YORK ( TheStreet) -- I am getting really paranoid these days. I listened to part of Sen. Rand Paul's filibuster the other day. It would seem that my government can now take me out with a drone strike without due process. Bin-Laden's son gets a trial by jury, but I have drones buzzing over my head that are ready to strike.What is wrong with this picture? There is nothing wrong with the following picture. This is a one-year chart of TransDigm Group ( TDG), a leading maker of drone parts.
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?
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 Follow @pwstreet This article was written by an independent contributor, separate from TheStreet's regular news coverage.