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Cognizant Technology Solutions Corp. (CTSH) is a large-cap growth company in the technology sector that provides custom consulting, technology and outsourcing services for companies. Over the past three years, this company has an earnings growth rate of 26% and a sales growth rate of 34% with zero debt.

Even more impressive is the fact that there has been significant positive earnings surprises in 4 of the last 5 reports, with one "meet" as shown in the chart below:

(click to enlarge)

Analysts have been so impressed that growth projections have been bullish and that trend has continued, as shown below:

(click to enlarge)

Why this is a strong candidate for your portfolio:

  • CTSH trades above its 50-day moving average
  • Analysts have been increasing guidance
  • Ranks in the top 5% of all stocks regarding earnings per share growth and price performance
  • Accumulation/Distribution stats show strong institutional support

The added perk:

There is an added bonus to this fundamentally sound equity. CTSH is a stock on The Blue Collar Investor watch list of eligible candidates for covered call writing. This means that in addition to potential share appreciation, additional profits can be generated by selling out-of-the-money call options. Let's look at a current 1-month options chain as the stock trades at $78.37:

Selling the $80 call option will generate an additional 2.6% over the next 5 weeks and allow share appreciation up to $80.

The $82.50 call option sale will generate an additional 1.4% over the next 5 weeks and allow share appreciation up to $82.50.

Conclusion:

Because of its strong fundamentals and strong growth projections, CTSH is a strong candidate for consideration in your portfolio. In addition to great fundamentals, CTSH options offer the added benefit of a second income stream by selling out-of-the-money call options to bolster profits.

Source: Fundamentally Sound With An Added Perk: Cognizant Technology Solutions