Disclosure: I own both companies. GLTA
I am interested in ATS and HPS.A but feel that both are overvalued at present. Technically, HPS appears to have a "blowoff" topping pattern while ATS is consolidating. Fundamentally, both look a little stretched as far as PE, P/CF go. The subject of growth, of course, will define future gains. From past answers, you like ATS "better" than HPS. First, can you confirm the above deductions and do a head to head comparison of the two? Second, where do you see future growth for both, and why? HPS actually looks to have the upper hand due to the "relectrification" theme as their products might attract a larger global audience. Third, can you provide what you feel are good entry points?
We would agree with the view that we like ATS 'better' than HPS. We do think HPS is a well-managed company that has been showing very good growth. Order backlog growth has been strong and profitability has expanded nicely. Trading at 10x forward earnings makes it very attractive and coupled with a growing dividend and strong balance sheet, we like it. It is much smaller than ATS and often gets overlooked. ATS is not cheap at 22x forward earnings and there is some inflation/cost concern here. Despite that, decent top-line growth is expected, with a faster margin expansion over the next few years. The company has posted several strong quarters recently and we like it's growth profile. ATS is a robotics play with a track record and we would consider HPS to likely benefit from the electrification theme.
For HPS, mid-40 range we think would be a good entry point, and for ATS, mid-50. (5iResearch)