Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Computer Modelling Group Ltd., a 35-year-old Calgary-based firm, develops reservoir simulation technologies that are used by more than 500 oil, gas, and consulting companies across the world. It has a $900-million market cap.
The company has grown earnings per share at a 21-per-cent rate over long term (using average of the 3, 4, and 5 year EPS growth rates) and sales at a 17-per-cent pace (using avg. of 3, 4, and 5 year sales growth rates).
Its profit margins are high and increasing (last three years: 31.9 per cent, 33.1 per cent, 38.3 per cent), which the Motley Fool-based model likes. The Fool model and several others like firm's lack of long-term debt.
Computer Modelling Group has increased earnings per share by $0.55 over the past decade while retaining $0.54 in earnings, making for a 101.6-per-cent return on retained earnings, which the Warren Buffett-based model considers exceptional.
It has averaged a 35-per-cent return on equity over past decade, part of why the Buffett-based model has some interest in it. It also offers a 3-per-cent dividend yield, unusual for a firm in its industry, and has a strong 86 relative strength.
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