This post is part of a special report, A Dozen Ways to Play an Obama Building Boom.
"Project management firm Hill International (NYSE: HIL) is one of the best ways to profit from the public works projects planned in government stimulus packages," says Dave Dyer.
In his The Dave Dyer Newsletter, he explains, "HIL is a consulting company that provides expertise in the project management area. Their business is a people business, not a business that requires them to invest in a lot of heavy construction equipment.
"I think this gives them three advantages: first, they do not have the long marketing cycle that can last for years on a large project, second, they have greater flexibility to expand or contract as business opportunities change, and third, their fee-based revenue structure is less risky than other compensation models used in the construction industry.
"HIL has two divisions. Its original business, founded in 1976, was a construction litigation support company that supplied expert witnesses and other expertise to construction companies involved in contract disputes.
"They saw early in their history that they could also provide value as a dispute preventer rather than just an after the fact resolver, so they started a project management division.
"Now, the two divisions are complementary because the expertise and reputation gained from their successful track record on managing projects makes them more credible as litigation resources.
"HIL, with a market cap of $255 million, has 2,300 employees in 80 offices world wide. Much of their business is international. They are an especially valuable resource in these markets because local construction companies are less likely to have project managers with professional experience.
"They have been acquiring some smaller firms in their fragmented industry, so it is best to look at internal organic growth to get a feeling for their performance. Organic growth of their consulting fees has been accelerating over the last five quarters: 24%, 28%, 36%, 40%, and 43%.
"Their P/E of 12 is near the low end of their five-year range of 6 to 39, they have a nice ROE of 16%, and almost no debt.
"Their backlog is at an all-time high and growing. Bank of America recently nearly doubled their line of credit from $35 million to $60 million, so the credit crunch is not a problem for them.
"The market has not been kind to HIL. It is currently about 70% off its high in August, even after a bounce off the bottom. If you can ever call a stock oversold, this is the time."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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