Consulting Stocks Stay Strong

2008 has been an exceptionally challenging environment for many companies to grow their earnings because of a number of factors that continue to wreak havoc on normally profitable business models.

Higher energy costs have been squeezing almost every company’s margins, none more significantly than the airline and auto industries. Raw materials costs continue to accelerate as large, developing nations like India and China compete for a limited supply of natural resources.

And finally, the credit markets have locked-up, making it very difficult for companies to secure the funding and capital so desperately needed to drive growth.

Help On The Way

But when the going gets tough, these companies know they can call upon a trusted ally to provide shelter from the storm. And that help comes in the form of consultants.

With substantial amounts of financial and reputational stress circulating through our economy, consultants are increasingly being called upon to provide a steady hand. These companies have seen a direct up tick in their business volumes as distressed companies search for methods to cut costs and save face.

Accenture C.E.O. William Green recently said that his company’s record second-quarter results were partially driven by strong demand created by stress from this “challenging economic environment.”

So on that note, lets move forward and take a look at some high-ranking Zacks consultant stocks that look well positioned for more growth.

High-Ranked Consulting Stocks

Accenture Ltd. (ABV) reported third-quarter results on June 26 in which revenue was up 20% and net income was up 36% from last year. This Zacks #1 rank stock is having a great year, recently advancing near the 52-week and all-time high just above $42.

FTI Consulting (FCN) is another Zacks #1 rank stock that is posting solid gains in a challenging environment. The analyst community is bullish on FCN, with the current-year estimate pegged at $2.58 per share and the next-year estimate at $3.17 per share, a 22% earnings growth projection.

Watson Wyatt (WW) has surprised and beaten analyst estimates in each of the last four quarters, having done so by an average of 11 cents, or 15.25%. With the current-year estimate projecting earnings of $3,35 per share, this stock has a forward P/E multiple of 17X.

H&R Block Inc. (HRB) is successfully executing its turn-around plan, recently moving back into profitability after reporting strong fourth-quarter results in which the company’s revenue was up 11% from last year to $2.6 billion. Estimates continue to rise for this Zacks #1 rank stock, with the current-year estimate advancing to $1.66 per share from $1.54 per share 30 days ago.

Conclusion

There are certain segments of the market that will perform well when other segments of the market struggle. By keeping a diversified approach to the market, an investor has the opportunity to rotate these companies into a portfolio when underlying economic circumstances are working in their favor.

Subscribe by RSS Subscribe by Email