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Topic: Growth Stocks

The Dun & Bradstreet Corp. $68 – New York symbol DNB

THE DUN & BRADSTREET CORP. $68 (New York symbol DNB; Conservative Growth Portfolio, Finance sector; WSSF Rating: Average) provides credit reports and other information on over 100 million companies in 200 countries.

These reports help lenders and purchasers make better business decisions, which cuts their risk.

Dun & Bradstreet’s earnings have grown at 17% compounded yearly over the past five years, compared to 26.5% for Moody’s. Consequently, its stock trades at a lower p/e— 17.4 times its 2006 profit estimate of $3.90 a share. However, we feel Dun & Bradstreet has great long-term growth potential as world trade grows.

Much of the company’s recent growth has come from a successful restructuring plan. It’s also selling overseas offices to local managers as franchises. That lets it profit from growing world trade, without having to directly manage these businesses.

The company is also using the Internet to cut its distribution costs and speed up delivery. For example, its new “DNBi” service gives subscribers online access to its vast database. Since the launch of DNBi two years ago, revenue per customer has grown 10%.

Dun & Bradstreet plans to keep expanding its electronic business. It recently paid $8 million for Open Ratings, whose software helps manufacturers analyze a wide range of data and identify trends.

The price is just 14% of the $0.81 a share (total $55.7 million) that the company earned before onetime items in the first quarter of 2006. It earned $0.70 a share ($50.2 million) a year earlier. Revenue rose 7.6%, to $367.2 million from $341.3 million.

Dun & Bradstreet is a buy.

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