(By Rich Bieglmeier) Our weekly sector scorecard offered very little in the way of bullish sectors to choose from for idea generation. However, as iStock does every week, we scanned through the equities in the emerging and mature bull columns to find a stock idea of interest.
Thinly traded Consolidated Graphics Inc. (CGX) stands out. The business support company is one of North America's leading general commercial printing companies with 70 printing businesses strategically located across 27 states, Toronto, Prague and a strategic alliance in Asia. The company has an impressive roster of clients, Disney (DIS), Tiffany's (TIF), Proctor & Gamble (PG), Apple (AAPL), Microsoft (MSFT), Starbucks (SBUX), and many others.
CGX's stock price has been basing since early May. Shares have motored back and forth, bumping off upper guardrails at $30 and lower guardrails at $24. Yesterday, on better than usual volume, the stock price regained the better side of its 50-day moving average. If recent trading patterns continue, iStock can see Consolidated driving towards $30, again.
That's a short-term possibility. Long-term, we noticed that insider Jon Biro purchased 7,000 shares of CGX at $25.91 in the open market. The chief financial and accounting officer, executive vice president, secretary and treasurer's $181,370 investment is worth noting due to his track record.
In February 2012, Biro sold 12,000 shares at $53.09 for $637,080. How close is that to the 52-week high of $55.88? Now, we are left to wonder how close is $25.91 to the year's low of $21.76? Somehow, iStock feels Biro has more than $30 on his mind.
We also like the way Consolidated Graphics' fundamentals stack up. Wall Street forecasts earnings to grow by a hefty and very attractive 31 percent next year. Meanwhile, the stock trades with a forward P/E of just 8.79. That seems like an unwarranted markdown to us, which shows up in CGX's PEG ratio of 0.79.
Shares are also discounted on a price-to-sales basis. The business support company trades for 26 cents for every dollar per share in revenue. The average peer trades for $1.35.
Consolidated Graphics could also be a sneaky way to profit from all the spending during this election season. In their most recent quarter, management announced, "election-related revenue growth" helped offset declines in same store sales of 2.5 percent. That was for the quarter ended July 30, 2012.
Well, as anybody who lives in an ever expanding list of swing states knows, the number of ads they saw in the summer pales in comparison to the endless parade of political ad campaigns that are live today. While many might dislike the impact that money plays on elections, investors should look for ways to get their slice of the pie.
Overall, timely insider trading, current technical conditions and discounted valuations make Consolidated Graphics an attractive idea for investors with short and long term time horizons.