Wednesday August 22, 2012
by Lou Gagliardi, editor Cabot Global Energy InvestorIHS (
IHS) is primarily a database research company that transforms data into critical information, providing forecasts on oil, gas and coal supplies, and insights on traditional and emerging energy markets.
IHS has grown by acquisitions over the last several years, growing revenues from 2005 to 2011 at an annual rate of 19%. The company has a strong balance sheet with debt to capital at 36%. Interest coverage is very high at an 18 multiple.
Despite volatile crude prices -- nearly 50% of its revenue base is tied to energy -- the stock has proven resilient.
Earnings expectations for 2012 and 2013 have moved higher over the last quarter. The stock's performance over the past year, two years and five years has been very strong.
IHS' behavior coupled with a low bet of 0.51, affords a buffer to downside crude price risk. The stock is outperforming the broader energy sector by a widening margin.
Technically, the stock is trading above its 50-day and 200-day moving averages, with the 50-day above the 200-day. Immediate support is at $107.34 at the 50-day average and longer-term support is at $99.30, at the 200-day.
My price target for IHS is $126 pr share over the next six months. Start with small purchases now, and look to buy more on pullbacks toward support. Invest for the long-term and be patient. Place a firm stop loss order at $103.25.
Learn more about this financial newsletter at Lou Gagliardi's Cabot Global Energy Investor.Related articles:
