Quite the challenging day in the markets today as the European situation continues to get worse and equities give up their gains for the week. Spain's 10-year debt yields passed 7 1/4% today as it appears Valencia, one of Spain's biggest regions, will seek a bailout from the federal government. We could have an ugly close as I think some investors will not want to be long going into the weekend. One stock I am looking to pick up if the market continues to fall is a fast-growing tech services firm, iGATE Corp. (IGTE), that is offering a good entry point given its growth prospects.
According to the business description from Yahoo Finance, "iGATE Corporation provides outsourced information technology and IT-enabled operations solutions and services worldwide."
Here are eight reasons why IGTE is a solid buy at under $16 a share:
- The stock sells at just over nine times forward earnings, a discount to its five-year average (15.9).
- Two beneficial owners (Apax and Viscaria) have purchased approximately $60 million in shares in May.
- The company has grown EPS at an average annual clip of 19% over the past five years.
- The six analysts who cover IGTE have price targets ranging from $18 to $22 on the stock with a median price target of $22.
- Earnings are expected to ramp up sharply. The company earned 89 cents a share in FY 2011, and analysts have it earning $1.42 a share in FY 2012 and $1.73 in FY 2013.
- Revenues are expected to climb 40% this year and around 10% in FY 2013. It has a small projected five-year PEG of 0.60.
- The company almost doubled operating cash flow from FY 2009 to FY 2011 and the stock sells for 10 times trailing OCF.
- The stock looks as if it is building a technical base at these levels (see chart below).
Click to enlarge image.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in IGTE over the next 72 hours.
