Quick access to organized technical information is essential to the success of any business with a significant scientific/engineering component. An Englewood, Colorado firm provides that access to some of the biggest corporations in the world.
IHS Inc. (NYSE: IHS) provides documents, decision-support tools and related services to customers in a variety of technical fields. The firm's Energy division delivers oil and gas data on exploration, development, production, and transportation activities to energy producers and oil companies. Its Engineering division provides technical specifications and standards, regulations, parts data, design guides and other information to customers in the defense, aerospace, construction, energy, electronics and automotive industries. Customers include Amgen (NASDAQ: AMGN), Boeing (NYSE: BA), DuPont (NYSE: DD), Exxon Mobil (NYSE: XOM), General Electric (NYSE: GE), General Motors (NYSE: GM) and Lockheed Martin (NYSE: LMT).
The company surprised the Street last month, when it reported Q2 EPS of 37 cents and revenues of $154.9 million. Analysts had been expecting 34 cents and $150 million. Management also guided 2007 revenues to about $660.9-671.9 million, versus consensus of $642.66 million.
The share price popped on the news and has since been consolidating the gain in a bullish "flag" pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Brokers recommend the issue with two "strong buys," three "buys" and two "holds." Analysts see a 16% average annual growth rate through the next five years. The IHS Price to Free Cash Flow ratio (25.16), EPS Growth rate (37.04%), Net Profit Margin (11.30%) and Return on Investment (11.02%) compare favorably with industry, sector and S&P 500 averages.
Institutions hold about 65% of the outstanding shares. Over the past 52 weeks, the stock has traded between $27.35 and $48.03. A stop-loss of $39.75 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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