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5 of the Fastest-Growing and Value-Creating Business Services Stocks

October 19, 2011 | About:
I analyzed the business services industry by growth stocks with a market capitalization of more than $300 million. My first condition is that the 5-year sales and earnings per share growth should be above 20%. Further, the company should have additional growth potential, measured by an expected 5-year EPS growth of more than 20% yearly. Finally, the growth should create value. This fact is covered by the ratio return on investment (ROI). The ratio shows how efficiently a company converts its debt and equity into profits. I decided to screen only stocks with a ROI of more than 10%. Here are the results:

1. Mercadolibre (MELI) has a market capitalization of $2.7 billion, generates revenues of $249.1 million and a net income of $63.6 million. Its following P/E ratio is 42.5 and forward price to earnings 28.2, P/S 10.8 and P/B ratio 13.7. Dividend Yield: 0.5%. The company grew 50.3% in sales and 130.8% in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 32.3%. The ROI is 36.3%.

2. American Public Education (APEI) has a market capitalization of $552.9 million, generates revenues in an amount of $224.1 million and a net income of $32.0 million. Its following P/E ratio is 17.9 and forward price to earnings 12.8, P/S 2.5 and P/B ratio 5.0. Dividend Yield: 0%. The company grew 47.7% in sales and 32.7% in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 21.7%. The ROI is 28.7%.

3. Netspend Holdings (NTSP) has a market capitalization of $506.0 million, generates revenues in an amount of $293.6 million and a net income of $27.2 million. Its following P/E ratio is 20.7 and forward price to earnings 10.9, P/S 1.7 and P/B ratio 3.0. Dividend Yield: 0%. The company grew 43.2% in sales and 174.3% in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 24.0%. The ROI is 13.6%.

4. HMS Holdings (HMSY) has a market capitalization of $2.2 billion, generates revenues in an amount of $339.0 million and a net income of $45.6 million. Its following P/E ratio is 49.2 and forward price to earnings 28.0, P/S 6.5 and P/B ratio 6.4. Dividend Yield: 0%. The company grew 38.2% in sales and 30.3% in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 25.6%. The ROI is 14.3%.

5. LivePerson (LPSN) has a market capitalization of $623.2 million, generates revenues in an amount of $120.4 million and a net income of $10.9 million. Its following P/E ratio is 58.8 and forward price to earnings 28.0, P/S 5.2 and P/B ratio 5.3. Dividend Yield: 0%. The company grew 37.6% in sales and 22.4% in EPS over the past five years. For the upcoming five years, the EPS growth is expected to grow 22.5%. The ROI is 10.0%.

About the author:

I am a private full time investor searching for investments and investment ideas.

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