"Under the Radar" uncovers little-known companies worthy of investors' consideration. Check in at 5 every morning to find out about stocks that tend to beat their bigger brethren.
) -- A handful of software stocks, including
( SY), recently hit 52-week highs. Here's a lesser-known application-designer that reached that same milestone.
designs software for product engineering. Its applications are used by aerospace, automotive, manufacturing and electronics companies. Over the past three years, Ansys has increased revenue 31% annually, on average, as profit climbed 94%. Investors seeking a growth company with ample margins, look no further.
Third-quarter net income increased 18% to $31 million and earnings per share climbed 14% to 33 cents. Revenue rose 5% to $128 million. The company's operating margin jumped from 31% to 38% on lower expenses.
Ansys repaired its balance sheet during the recession. Its cash balance has risen 26% to $294 million since the year-earlier quarter and debt has fallen 17% to $232 million, giving Ansys a liquid tilt. We give the company a financial-strength score of 8.9 out of 10, higher than the "buy"-list average of 7.1. Ansys also receives top marks for growth and volatility, placing it near the top of our 5,000-strong coverage universe.
A shortcoming is the company's return on equity, a key measure of profitability. In the latest quarter, its 9% return lagged the industry's 20% mark, but beat the S&P 500's 3% figure. Its stock has rallied 40% this year, more than major U.S. indices. As a result, Ansys is more expensive than application-software peers based on trailing earnings, projected earnings and sales. But the shares are cheap when considering book value.
-- Reported by Jake Lynch in Boston.