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Can CRAI And CVGI Continue To Beat Street Expectations?

|Includes:CRA International,Inc. (CRAI), CVGI

Investors like a stock with a history of meeting or exceeding Street expectations. Global consulting firm CRA International Inc. (NASDAQ: CRAI) has a string of quarters behind it in which the company simply outperformed the market, while investors in vehicle component maker Commercial Vehicle Group, Inc. (NASDAQ: CVGI) have already experienced massive returns in recent months. Here is a closer look to see if these companies can continue to offer sound returns.

CRA International, better known as Charles River Associates, offers economic, financial and management consulting services to its corporate clients. The company posted great results for the full year ended December and shared an upbeat outlook for 2014. The momentum continued in the first quarter as CRA International posted a higher top line and 14.8 percent jump in earnings. A big positive factor is that the company has achieved this scale without debt on its balance sheet.

The stock trades at a price earnings ratio of 19.9 and very close to its book value of $22.6 per share. The market expects the tailwinds to continue as reflected in the forward price earnings ratio of 16.3. This is a good indication that the stock is undervalued and has further room to grow. The company also believes its shares are undervalued and thus, has a share repurchase program in effect. During the latest quarter, the company repurchased and retired 95,600 shares under the program. This is one more reason for investors to consider the stock as earnings per share will continue to grow even if bottom line stagnates.

As the name suggests, Commercial Vehicle Group operates in the commercial vehicle market, supplying cab related products and systems to its automotive clients. The stock has jumped more than 40 percent in the last six months as it continued to improve its past performance. However, it was the ugly duckling of the market in the not so distant past. Having posted a loss of $12.5 million in 2013 and saddled with high debt, the stock was downgraded and written off by many.

Although some of these issues still remain, the company has capitalized well on the recovery industry demand. Commercial Vehicle Group posted an 11.4 percent growth in revenues in the latest quarter ended March 2014, while losses were trimmed from $4.6 million to just $0.5 million. The stock is currently priced at 13.4 times its forward earnings. Although the stock has appreciated substantially in recent months, investors can expect this outperformance to continue for some more quarters given the previous year's low base.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: CRAI, CVGI