Long-term deals give CGI an edge

Article Excerpt

CGI INC., $116 is your #1 Aggressive buy for 2021. The company (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 247.9 million; Market cap: $28.8 billion; Price-to-sales ratio: 2.4; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is Canada’s largest provider of computer-outsourcing services. CGI gets roughly half of its revenue from long-term contracts, usually longer than five years. That stability gives it predictable cash flows and cuts its risk. As well, these long-term deals give the company more time to learn the needs of a particular client and customize their systems. That makes it harder for clients to switch to a rival firm. Moreover, clients are becoming less likely to use multiple outsourcing firms due to the increased possibility of a data breach, particularly as many of their employees continue to work remotely. CGI is your #1 Aggressive Buy for 2021. 2021…