Shares of medium-sized companies are outpacing blue chips year, and the rally might not be over for these five mid-cap stocks.
5. Lincoln Educational Services provides career education.
The numbers: Third-quarter profit more than doubled to $14-million, or 50 cents a share, as revenue grew 48 per cent to $148-million. Lincoln's gross margin rose from 63 per cent to 65 per cent, and its operating margin increased from 10 per cent to 16 per cent. The company has a strong financial position, with $38-million of cash and $37-million of debt.
The stock: Lincoln has advanced 64 per cent this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 15, a discount to the market and education peers. Lincoln doesn't pay dividends.
4. DeVry offers training courses and degree programs at its schools.
The numbers: Fiscal first-quarter net income increased 57 per cent to $55-million, or 76 cents a share, as revenue grew 42 per cent to $431-million. DeVry's gross margin remained steady at 57 per cent, and its operating margin rose from 15 per cent to 18 per cent. A quick ratio of 0.9 indicates less-than-ideal liquidity. A debt-to-equity ratio of 0.1 demonstrates modest leverage.
The stock: DeVry has fallen 6 per cent this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 21, on par with the market and education peers. The shares pay a 0.3 per cent dividend yield.
3. Tyler Technologiesprovides technology services to government agencies.
The numbers: Third-quarter net income rose 18 per cent to $7.5-million and earnings per share climbed 25 per cent to 20 cents, boosted by a lower share count. Revenue grew 8 per cent to $74-million. Tyler's gross margin remained steady at 47 per cent, and its operating margin was unchanged at 17 per cent. The company has a strong financial position, with $7.9-million of cash and just $2.1-million of debt.
The stock: Tyler Technologies has rallied 67 per cent this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 29, a premium to the market, but a discount to application software peers. The company doesn't pay dividends.
2. Balchem sells specialty chemicals.
The numbers: Third-quarter net income increased 43 per cent to $6.9-million, or 36 cents a share, as revenue dropped 7 per cent to $54-million. Balchem's gross margin rose from 25 per cent to 30 per cent, and its operating margin expanded from 12 per cent to 19 per cent. The company has an admirable financial position, with $39-million of cash and $6.6-million of debt.
The stock: Balchem has risen 23 per cent this year, more than the Dow Jones Industrial Average and S&P 500 Index. The stock trades at a price-to-earnings ratio of 23, a premium to the market, but a discount to specialty chemical peers. The shares pay a 0.4 per cent dividend yield.
1. Monro Muffler Brake repairs cars and sells tires.
The numbers: Fiscal second-quarter profit increased 30 per cent to $10-million, or 49 cents a share, as revenue grew 14 per cent to $137-million. Monro's gross margin fell from 46 per cent to 43 per cent, but its operating margin rose from 11 per cent to 13 per cent. The company holds $4-million of cash and $83-million of debt.
The stock: Monro Muffler Brake has gained 20 per cent this year, more than the Dow, but less than the S&P 500. The stock trades at a price-to-earnings ratio of 22, a premium to the market and auto retailers. The shares pay a 0.9 per cent dividend yield.