Topic: Growth Stocks

HARTE-HANKS INC. $12 – New York symbol HHS

HARTE-HANKS INC. $12 (New York symbol HHS; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 63.6 million; Market cap: $763.2 million; Price-to-sales ratio: 0.9; Dividend yield: 2.5%; TSINetwork Rating: Average; gets two-thirds of its revenue by selling direct-mail and other marketing services to a wide variety of clients. The remaining third comes from publishing free, advertising-supported newspapers in Florida and California.

In August 2010, the company paid $12.9 million for Information Arts (UK) Ltd., which provides data warehousing services to businesses in Europe. Right now, Harte-Hanks gets 90% of its sales from North America, so expanding overseas lowers its risk.

In the three months ended September 30, 2010, revenue rose 3.5%, to $216.7 million from $209.3 million a year earlier. That’s mainly because Harte-Hanks won a large contract. However, the extra costs related to this job, as well as adding Information Arts’ employees, caused earnings to fall 1.7%, to $13.8 million from $14.1 million. Earnings per share were unchanged at $0.22.

The company’s strong reputation should keep helping it attract more clients as the economy recovers. The stock trades at 13.3 times the $0.90 a share that Harte-Hanks should earn in 2010.

Harte-Hanks is a buy.


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