IHS: Lower profile, higher earnings

Posted Jan 17th 2008 6:47PM by Joseph Lazzaro
Filed under: Stocks to Buy

Investors/readers know that higher-profile companies obtain most of the business and financial world's headlines. Still, that's not to say that lower-profile means lower profits, and there's no better proof of this than IHS.

IHS Inc. (NYSE: IHS) publishes technical documents for clients in the energy, defense, aerospace, construction, electronics, and automotive sectors, and distributes documents in several formats (Internet, intranet, extranet, CD-ROM).

Analysts really like IHS's energy unit (53% of revenue) which provides data on exploration, development, production, and transportation activities. As one might sense in an oil-hungry world, energy data has taken on added importance with oil's rise in value. The Reuters FY 2008/FY 2009 EPS consensus estimates for IHS are $1.94 to $2.37.

The risks? HIS has a relatively short history as a public company. Further, a sustained, substantial decline in oil/natural gas exploration activity would undoubtedly decrease demand for IHS's services.

The First Call mean rating for IHS is: Buy [6 firms]. Mean 2008 target: $72.00 [high: $73, low: $70].

Stock Analysis: HIS is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from IHS's shares. Sell/Stop Loss if you were to purchase shares in this company: $34.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: business services, IHS, IHS Corp., publishing, technical documents