This information technology company’s shares were recently upgraded to Buy by UBS Securities.
Cognizant Technology (CTSH)
from Cabot Benjamin Graham Value Investor
Cognizant Technology (CTSH) offers complete start-to-finish solutions for designing, testing and integrating complex software systems for corporations. More companies are outsourcing partial or full responsibility of their technology functions to Cognizant. The objectives of clients are to cut costs and to quickly transition to new technologies including Cloud computing and business activities which can be completed electronically.
Cognizant is gaining significant market share. Sales and EPS (earnings per share) advanced a remarkable 20% in 2013. Economic pressures and industry shifts are causing fundamental changes in client needs. Cognizant is helping clients improve their performance and beat their competition. Cognizant’s additional expansion overseas and advancement into the telecomm, media and entertainment sectors offer outstanding opportunities for future growth.
Management’s plan to focus on recruiting, training and retaining employees will enable the company to remain ahead of competitors.
I expect sales and earnings to increase 17% during the next 12 months ending 3/31/15. CTSH shares are reasonably valued at 23.7 times current earnings per share. The company has no debt and lots of cash to fund future expansion and new services. I expect CTSH, which split 2 for 1 recently, to increase to my Min Sell Price of 71.75 within one to two years.
J. Royden Ward, Cabot Benjamin Graham Value Investor, www.cabot.net, 978-745-5532, April 2014