The shipping industry is being pinched from lower consumer spending. Companies implementing cost-cutting plans will look to Cass Information Systems ( CASS) and its rivals to analyze and audit freight payment, hoping to save money.

TheStreet.com Ratings gives Cass a "buy." St. Louis-based Cass, whose roots date back to 1906, provides payment and information processing services to companies across the U.S. The company uses proprietary software to simplify operations and reduce costs. It also offers freight invoice rating, payment processing for utility- and facility-related expenses, and commercial-banking services.

Those services are in demand as companies, particularly shippers, seek to cut costs amid an economic recession. Larger supply-chain management firms offer broad and expensive consulting projects, while Cass provides specific services and immediate savings.

Cass is also a leader in utility-payment outsourcing and can offer quantifiable savings for businesses seeking to lower energy costs. The company has proprietary systems to reduce and control telecommunication expenses as well. Cass Commercial Bank is well-positioned to succeed as a lender because it has access to companies' accounting information and can therefore identify ways for them to become more efficient and repay loans.

Many other firms in the outsourced services sub-industry, including privately owned Data2Logistics and TranzAct Technologies, are reporting a jump in business. Cass is an attractive target for a large consulting or supply-chain management firm because of its relevance during trying economic conditions. The stock hasn't received much publicity because of the company's size. It has a market capitalization of $311 million, placing it just above the micro-cap threshold.

Cass has posted consistent growth in revenue and EPS over the past two years. Third-quarter revenue climbed 1.3% to $25.1 million from a year earlier, while net income advanced 11.8% to $5.23 million. Gross margins widened to 34.22% from 31.08%, and operating margins climbed to 29.8% from 27.89%.

A debt-to-equity ratio of 0.03 indicates miniscule debt. Also, Cass has $100 million in cash reserves and about $850 million in total liabilities. The company operates within the IT services industry, which includes more well-known names such as Teletech Holdings ( TTEC), Wright Express ( WXS) and Euronet Worldwide ( EEFT), whose stocks have declined significantly this year. Still, Cass is trading at an industry discount based on price to earnings, price to cash flow and price to book. The shares, which have risen 2% this year, are expensive based on price to sales.

Cass has a beta of 0.25 and a dividend yield of 1.41%. The company faces risks inherent to its size, as it only has 9 million shares outstanding. Some 19,207 shares are traded on an average day, indicating weak stock-market liquidity.

Cass is a stock for buy-and-hold investors. Value and fundamentals are no guarantee of price appreciation in a down market. Also, small-market capitalization and thin trading volume make Cass a comparatively illiquid security. If the company misses earnings guidance or issues cautious warnings, rapid depreciation is likely. Consider macroeconomic and idiosyncratic risk before investing in Cass.

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