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20
Take notice growth investors: Stock in Caldwell Partners is still a bargain
Posted by: Gerry Wimmer
7/20/2014
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TOP IDEAS: Caldwell Partners International's (TSX: CWL) stock is up 76% with more upside to come - Investorfile Target Reached.




Investorfile’s share price accumulation target of $1.30 for Caldwell Partners International Inc. was reached on July 18, 2014. For the record, we do not revise share price targets for our Investorfile Top Ideas - Small Cap Value Stocks. We have positioned our blog to be one of the first providers of a pragmatic perspective of a small cap company stock's potential worth, where there may be uncovered value that has been largely overlooked by the investment community.


Caldwell Partners International Inc. (TSX: CWL - $1.30) is a North American executive search firm whose focus is on the high end of the employment search market; for CEOs, CFOs, presidents, boards of directors and senior level positions. The Company has about 32 executive search partners in the USA and Canada with a revenue run rate over $40 million.

For Caldwell Partners, we think the Investorfile blog has had a pretty good read on the Company’s business prospects and stock appreciation potential as one of our Top Ideas.

Case in point:

First, it was our prediction last December that Caldwell Partners' executive search business was on the upswing and should realize a big turnaround in revenue growth and profits for fiscal 2014 (See: Investorfile strikes big on 3 small cap predictions in 2013; declares 3 more for 2014 – New Prediction #2). That prediction followed our blog post on the Company in November 2013 (See: For Caldwell Partners International: 2014 could be a breakout year for profits and stock price.)

Since that time and nine months into fiscal 2014, Caldwell Partners reported that revenues reached $31.9 million, 36% higher than 2013 with profits about $0.06 per share compared to a loss of $0.06 per share the year prior.

Second, we suggested 3 months ago that small cap investors should pay more attention to Caldwell Partners’ stock to start sharing in the gains (See: Caldwell Partners is on a growth course). Then the Company’s stock was worth $0.96.

Today Caldwell Partners’ shares trade at $1.30.

The question now: Is there still plenty of upside potential for growth investors to continue to invest in Caldwell Partners’ stock?

We say yes, and give 5 reasons why:

  1. Business metrics are strong. The Company recently has said they continue to see gains in important metrics for the executive search business such as average fee and searches per partner, and revenue levels on a per partner basis are at a new high.
  2. Cash rich to aggressively grow. Caldwell Partners has about $11 million in unencumbered cash on hand (no debt) which will be used grow for new partner acquisitions.
  3. Increasing dividends. Last year the Company increased the dividends, while this year Caldwell Partners is more profitable and can afford even higher dividend payouts.
  4. Attracting new shareholders. Caldwell Partners' market capitalization is on the rise, which is beginning to attract a wider institutional investor audience to invest in shares of the Company.
  5. Takeover target. Not that a takeover is imminent, but the Company’s growing revenue base (of over $40 million) could attract a buyer looking for footprint in the North American executive search space.

The stock price is up 76% since we first recommended that small cap value investors should accumulate Caldwell’s stock up to a price of $1.30 per share. Including dividends the total the return to date is 113%. (See: Caldwell Partners International: US expansion pays "dividends” for small cap value investors.) That said, we are still very bullish on the Company’s fiscal 2014 outlook and the stock price should continue its appreciation trend beyond $1.30.

The Company currently pays an annual dividend of $0.07 per share, paid out quarterly.

Caldwell Partners has approximately 21 million shares outstanding.

The Caldwell Partners International website: www.caldwellpartners.com

Author ownership disclosure: TSX: CWL - YES


Read Disclaimer:

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.
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Comments:
Posted by: jon
Another great small cap stock pick Gerry. Caldwell Partners TSX: CWL has now joined your long list of 100%+ winners. Keep it up.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.