David Sharek
David Sharek is stock portfolio manager at Shareks Stock Portfolios and the founder of The School of Hard Stocks.
Sharek's Growth Stock Portfolio has delivered its investors an average return of 18% per year since inception vs. the S&P 500's 10% during that time (2003-2020).
David's delivered five years of +40% returns in his 18 year career, including 106% during 2020.
David Sharek's book The School of Hard Stocks can be found on Amazon.com.
Cognizant Technology Solutions’ is hitting its sweet spot with sales and profits growing more than 40%. IT outsourcing is back, and companies are spending in this area. Even I am considering having some web-based tasks done by outsourcers. Companies (including mine) will no-doubt provide more funds to the technology budget in 2011. Some of that money will come CTSH’s way.
The things I like best about this one-year chart is profits were up 47% last quarter and Estimates show 38% and 29% growth coming. Profits have been up every year — so you can buy-and-hold this stock. The P/E of 27 is higher than the estimates Long Term Growth Rate because CTSH is in a sweet spot in its business cycle.
Cognizant had profit’s up 47% last quarter on a 43% rise in revenue. The company has a nice recurring revenue stream that keeps profits churning upward most every quarter. This is not a tech stock that depends on selling a new product.
CTSH has the ability to be worth 30 times earnings. Since we are in the sweet spot of the outsourcing market, growth could slow later in the year, so 35 times earnings might be too much. At $72, CTSH is selling close to its 2011 Fair Value of $80. Upside is 33% for investors willing to hold the shares to 2012.
CTSH, a former top holding of mine, fell from grace in 2008 with the financial collapse. Financials make up a big part of Cognizant’s revenue, and less bank business was expected to hamper growth. When I sold CTSH previously, estimates were for 12% growth ahead. Clearly business picked right back up and the stock followed through.
