This “Boring” Business Has Long-term Potential
Wednesday, February 27th, 2008
By Mitchell Clark, B.Comm. for Profit Confidential
Last year, I wrote extensively about a great company that operates in a boring business. The older I get, the more it seems I’m attracted to these sorts of businesses.
The company I’m referring to is Huron Consulting Group, Inc. (NASDAQ/HURN) and it’s been an enormous success, both operationally and on the stock market.
Huron Consulting, founded in 2002, is based in Chicago. The firm dispenses fee-based advice on mergers and acquisitions, litigation, and intellectual property, as well as strategic advice to universities, healthcare companies and law firms.
The best way to put it is that if you or your organization need(s) advice, this company has someone you can talk to. Naturally, everything is for a fee — and this company has demonstrated that it can grow the fee-based advice business at an impressive rate.
The company is just about to report its fourth-quarter and year-end financial results for 2007. In its third quarter last year, the company reported that its revenues grew an impressive 78% to just over one hundred and thirty-four million dollars, up from just over seventy-five million dollars for the third quarter of 2006.
Net income in the third quarter was ten and a half million dollars, or $0.58 per diluted share, as compared to net income of $6.8 million, or $0.39 per diluted share, generated in the third quarter of 2006.
Revenues for the nine months ended September 30, 2007, grew 80% to over three hundred and sixty-eight million dollars, up from over two hundred and five million dollars in the first nine months of 2006.
Net income for the period grew to more than thirty million dollars, or $1.69 per diluted share, as compared to net income of almost nineteen million dollars, or $1.08 per diluted share.
Over the last two years, Huron Consulting’s stock price doubled, and it is now trading in a range just over $60.00 per share. I really like the consulting business, not because of the excitement it generates (or lack thereof), but because of the fees it generates. If you want to talk to somebody with expertise in a specific area, it’s going to cost you.
Wall Street expects substantial growth from Huron Consulting over the next several years and I think this stock is attractively priced right now. You can have the high-tech flyers, but it also pays to have a company like Huron Consulting in your portfolio for the long term. It’s no one-time wonder, but a consistent grower with a proven track record.
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Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.
