Stocks That Almost Made The Cut: February 2007

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February 2, 2007 | S.T.A.M.T.C | | Author Asif

Since the focus of the February 2006 edition of SINLetter was a long/short strategy as applied to closed-end funds, I looked into very few stocks as potential candidates for the investment newsletter. As mentioned in the newsletter, I came across Ireland based ICON plc (ICLR) when I noticed their strong hiring activity. I also noticed that the overall job market seemed quite strong and RCM Technologies (RCMT), a consulting and engineering company I featured in the April 2006 edition of SINLetter and blogged about in November last year had a very strong January, rising 12.85% in a single month.

Based on this, I also looked into other consulting/staffing firms like Robert Half International (RHI) and Manpower (MAN) as potential candidates for this month’s SINLetter. Robert Half has some of the best gross and operating margins in its industry and the company has been growing at a healthy pace over the last few years. The fourth quarter of 2006 was no different with the company delivering a 17% increase in profits to $75.4 million and 20% increase in revenue, which topped more than $1 billion. Full year 2006 earnings increased 19.04% while revenue increased at an equal clip of 20.06%. The company is growing organically as well as through acquisitions in this highly fragmented sector. Did I mention that the company also has a solid balance sheet?

Concerns about the economy kept Robert Half down through most of 2006 and the stock closed 2006 at pretty much the same price as 2005. I am still a little concerned about the strength of the economy but a 3.5% increase in fourth quarter 2006 GDP combined with a drop in the price of crude oil have allayed some of my fears. Robert Half did not make the cut this month because I chose to concentrate on closed-end funds but it remains high on my (ever growing) watch list.

Full Disclosure: I am still long RCM Technologies and recently interviewed with Robert Half International.

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