The second stock we added was Cognizant (NASDAQ:CTSH), the information technology (IT) consultant. The company’s revenue grew at an amazing 30% annualized rate between 2005 and 2015, as technology transformed business models in its focus areas of financial services and healthcare. Over the past year, growth has slowed to an 8%-10% range as some IT projects have shifted to data centers and the cloud, while banks and health insurers have reduced spending due to regulatory uncertainty. Even if Cognizant grows at a high single-digit clip, we believe our upside is significant due to management’s newfound focus on increasing margins and returning cash to shareholders.
Jerome Dodson (Trades, Portfolio)'s first quarter 2017 Parnassus Funds commentary.
