Making Money Off Jobs: Under the Radar

NASHUA, N.H. (TheStreet) -- Training employees is an effective way for companies to invest in their business.

Increasing workers' skills increases productivity, leading to higher sales and profits at reduced costs. Nashua, New Hampshire-based SkillSoft(SKIL) deals in just that. Training employees isn't a glamorous industry, but it's valuable to the economy and is projected by analysts to register healthy growth in the coming years.

With major customers like Visa(V), Subway, Hilton(HLT), Gilbane and Koch on board, SkillSoft's products have the backing of respected companies from many industries. Analysts expect earnings to increase by about 54% for the year ending this month.

A price-to-earnings to growth (PEG) ratio of just 0.84 and a price-to-earnings (P/E) ratio of only 14.2 versus the industry average of 39.7 make SkillSoft look cheap too. A return on equity of 32.7% paired with and operating margin of the same amount and a profit margin of 23.5% show that the company runs a very high margin and is able to channel that to the bottom line with very little loss.

A sensible debt load of just about 50% helps to make this possible since big chunks of cash aren't being burned off to interest payments. As a result of strong operating performance, SkillSoft's stock has risen about 31% over the past year, besting the S&P 500 by about 10 percentage points. Analysts expect revenue to increase about 2% next year as earnings rise 4.2%.

Companies that eschewed investments during the downturn to avoid expenditures will likely be loosening the purse strings in 2010. In addition, as hiring speeds up, companies will need to train new employees, leading to a boon for SkillSoft.