Last week, I wrote here about coiled spring stocks, i.e., those equities with buying power that buoys them during downturns and propels them rapidly upward once those downturns end. The most recent Investment Digest contains yet another great crop of these standouts, two of which I want to discuss here—Sapient (SAPE) and The Hackett Group (HCKT). Their charts tell the story:
Compare SAPE’s and HCKT’s charts to a chart of the Dow Jones Industrial Average, and you can see why I call these two coiled springs:
The other interesting thing about Sapient and Hackett is that they’re in the same business: consulting.
These two consultancies are performing remarkably well today, thanks to a combination of recovering corporate earnings and a new post-recession business optimism. Sapient’s revenues grew 30% in 2010, compared to a 3% decline in 2009. Consensus is for Hackett’s revenue to increase 9% in 2011. Businesses that survived the brutal recession have learned the value of operating efficiently, which makes them willing to spend money to streamline operations. Sapient and Hackett are adept at helping them accomplish those goals.
Sapient and Hackett are also benefiting from their particular strength in technology consulting.
Sapient’s SapientNitro division focuses on all things Internet, including the business and marketing applications of social media, and has helped many businesses adapt to today’s rapidly changing techno-landscape. Hackett also has a technology solutions group, which helps clients invest in technology with the greatest and quickest return on investment.
Plus, their charts are excellent, considering recent market action. Watch for these two to pop once the market heals, and be ready to pounce.
Wishing you success in your investing and beyond,
Chloe Lutts
