AGI vs EDV

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Hi guys,  I see both stocks are scored high in the growth screener. AGI stock price is less than EDV. Which stock has the higher growth potential if choosing between the two? Thanks.

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Asked on July 19, 2020 10:31 pm
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Hi Anthony,

Just remember that stock price means absolutely nothing. A company with a stock price of $1,000 can be undervalued compared to a stock trading at $10.00. On it's own, the stock price is irrelevant.

In terms of higher growth potential, both have very strong expected growth rates. AGI is expected to average 56.7% earnings growth and 16% revenue growth over the next couple of years. For its part, EDV is expected to grow earnings and revenue by an average of 51 and 54% respectively. For EDV, a good portion of this growth is coming from the assets purchased when it acquired SMF.

This is how they stack up in terms of current valuation:

Forward P/E
Trailing P/E
P/B
P/S

AGI
29.093
38.135
1.5491
5.8985

EDV
14.365
24.119
3.3034
2.705

As you can see, EDV is better valued in terms of earnings, and sales, but AGI is cheaper on a P/B value. All this considered, I think EDV offers slightly better growth opportunity given its earnings valuations and expected growth rates. That being said, EDV's SMF North African asset are higher risk and is likely why it is trading at a discount. All things to consider.

In my opinion, both represent solid investment opportunities on the basis that the price of gold will be supported for some time. Of note, I am long AGI.

Mat

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Posted by Mathieu Litalien
Answered on July 20, 2020 5:54 am