Topic: Growth Stocks

Oil sands help Computer Modelling turn steady profits

Oil sands help Computer Modelling turn steady profits

COMPUTER MODELLING GROUP (Toronto symbol CMG; sells consulting services and software that help oil and gas producers use advanced recovery techniques to get more out of their existing wells. The company has customers in over 50 countries and offices in Calgary, Houston, London, Caracas and Dubai.

In the three months ended March 31, 2013, Computer Modelling reported revenue of $19.3 million. That’s up 12.0% from $17.2 million a year earlier.

Earnings rose 9.6%, to $7.3 million from $6.6 million. Per-share earnings rose 5.6%, to $0.19 from $0.18, on more shares outstanding.

Computer Modelling holds cash of $59.4 million, or $1.56 a share, and has no debt. The company has just raised its dividend by 12.5%, to $0.18 a share from $0.16. The stock yields 3.1%. Computer Modelling also paid a special dividend of $0.05 a share on
June 14, 2013.

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Tech stocks: Simulations in shale gas, coalbed methane and stranded gas point to future growth

Computer Modelling makes mostly recurring revenue from software licences and maintenance contracts for its products. That gives it long-term stability.

The company is already a leader in complex heavy oil and oil sands simulations. It should profit further as oil and natural gas producers continue to develop other unconventional sources, such as shale gas, coalbed methane and stranded gas.

In the latest edition of Stock Pickers Digest, we look at Computer Modelling’s financial outlook and especially its decision to raise its spending on research and development to even higher levels. We conclude with our clear buy-hold-sell advice on this stock.

(Note: If you are a current subscriber to Stock Pickers Digest, please click here to view Pat’s recommendation. Be sure to log in first.)

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Do you believe that companies that serve the energy industry, like Computer Modelling, are only good investments when demand is up and oil prices are rising? Or do you think it is more important that the individual firm has a dominant role in own area of expertise? Let us know what you think.


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