TOP IDEAS: Strategic additions to executive search partners pave the way for growth at Caldwell Partners International (TSX: CWL).
Investors who buy shares today in Caldwell Partners International's (TSX: CWL-$0.77) earn a dividend yield of 7.8%. The dividends pay small cap value investors handsomely to hold the stock and realize its growth potential.
Caldwell Partners is a North American executive search firm whose focus is on the high end of the employment search market; for CEOs, presidents, senior level positions where an executive search is seen as an important business investment rather than an expense. This high end work brings in higher search fees.
Caldwell Partners' numbers for the first two quarters of fiscal 2013 would not excite many small cap investors. But third quarter results were encouraging with the strong increase in executive search booking activity that led to a 35 per cent quarterly increase in revenues sequentially to $9.2 million. With the exception of a significant one-time severance expense, the Company was profitable in fiscal Q3.
Though historically rising revenues in the back half of the Company's fiscal year is the norm, the magnitude of the increase in revenues from second to third quarter in fiscal 2013 and the Company reporting that a notable strengthening in the number of new executive searches commencing suggest a trend that the next few quarters could also have some very strong results.
In fiscal 2013, Caldwell Partners internally continues to make important investments in people to enhance its business development capabilities with select hires of high-calibre search professionals; executive search partners each with the potential to generate in excess of $1 million in fees for the Company annually.
With 34 executive search partners in the USA and Canada and growing, Caldwell Partners' ability to attract top senior executive search talent is impressive, with the announcements of 5 new partners added in 2013 to date. Caldwell Partners believes there is still a large opportunity to grow organically with further additions of top producers in executive search field for the Company in both Canada and USA.
Fortunately Caldwell Partners also has the resources to grow and attract new partners. The Company's balance sheet remains strong, debt-free with $7.8 million in cash and marketable securities.
Even though the Company has stated that it continues to see difficult market conditions operating in slower-growing economies, resulting in fewer overall executive searches, the recent additions of top executive search producers to its team should have positive impact on revenues with a greater leverage on costs to finish fiscal 2013 strong, and to grow profits in fiscal 2014.
Therefore we continue to recommend for small cap value investors that Caldwell Partners shares be accumulated up to a price of $1.30, while earning a quarterly paid dividend. The Company's Q4 fiscal 2013 results may be the impetus for new investors and an appreciation in the stock price.
Caldwell Partners' stock was first profiled for our Top Ideas at the end of 2012 at $0.74 (See: Caldwell Partners International: US expansion pays "dividends” for small cap value investors) and since has declared/paid $0.06 per share in dividends to shareholders.
Caldwell Partners has approximately 17 million shares outstanding.
The Caldwell Partners International website: www.caldwellpartners.com
Author ownership disclosure: TSX: CWL - YES
This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice.Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.
Investorfile.com is not engaged in an investor relations agreement with The Caldwell Partners International Inc. nor has it received any compensation from The Caldwell Partners International Inc. for the preparation or distribution of this article.
The author of this article has acquired and may trade shares of The Caldwell Partners International Inc. through open market transactions and for investment purposes only.