Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable, global trend as a support. And with the aforementioned in mind, Equifax Inc. (NYSE: EFX) is worth a review. Equifax is one of three global providers of consumer and commercial credit information, commonly called credit reports. And in these capital-challenged days, if your 'tri-merged doesn't surge,' chances are you're not getting a home mortgage.
Here's the case for Equifax's shares: cost-cutting, stream-lining of existing operations, and debt repayment should be enough to support shares.
True, revenue for FY2009 should decline 4-7%, due to the recession lowering the number of consumer credit reports requested, but the view from here argues that decline has, for the most part, already been priced into the stock. The First Call FY2009/FY2010 EPS estimates for EFX are $2.33 to $2.52.
Moreover, any hint of a U.S. economic recovering should result in institutional investors adding to positions, and that fact, combined with international market opportunities (particularly in Latin America), tip the scale in favor of a Buy, particularly with a P/E of just 14.
Stock Analysis: Equifax is a moderate-risk stock. Consider buying a 25% position in EFX now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your EFX position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $17.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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