Outsourcing Specialist a Buy for Growth

Article Excerpt

CGI GROUP INC. $9.00 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 308.4 million; Market cap: $2.8 billion; SI Rating: Extra risk) provides information technology and businessprocess services to a wide range of business and government clients. The company has over 100 offices in 16 countries. However, North America accounts for 92% of its revenue. Most outsourcing contracts run from 5 to 10 years. That gives CGI steady, predictable revenue streams. Long-term contracts also give CGI time to build close relationships with its clients. That helps it retain those clients, and sell them more services. CGI’s revenue grew from $3.2 billion in 2004 to $3.7 billion in 2008 (fiscal years end September 30). Earnings rose from $0.44 a share (total $185.4 million) in 2004 to $0.92 a share ($297.9 million) in 2008. However, the 2008 earnings included $26.6 million in unusual income tax gains. Backlog now over 3 years’ revenue In the latest fiscal year, the company booked $4.15 billion…