Hilary Kramer Cognizant Technology Solutions Corp. CTSH-Q BUY Oct 14, 2016

(A Top Pick Dec 8/14. Up 5.26%.) Uses technology to help reduce costs in the financial sector, insurance and healthcare. Likes the long-term trends of this. Trading at only 16X earnings. Still a Buy.

A fantastic company, and you should add to your holdings. Technology is coming into pretty much every industry across the globe, and this company comes in to make a company lean. They do retooling of how a company does business. A very powerful, long term secular trend. (See Top Picks.)

(Market Call Minute.) Their biggest vertical, the healthcare sector has pulled back, and until we see a resurgence he would just hold.

(Top Pick Sep 14/15, Dow 13.63%) IT Consulting and outsourcing. It has pulled back recently because of comments made last quarter about macro headwinds. They have been growing double digits for over 12 consecutive years organically.

Cognizant (CTSH-Q) or CGI Group (GIB.A-T)? This is in IT consulting to financial institutions and other big organizations. Both are growing at about the same rate, about 10%. When looking at the multiple they are trading at, they are virtually the same, 15 or 16 times next year’s earnings. The difficulty here is that the CEO has just resigned and the company is being investigated for bribery in India. Of the 2, he prefers CGI, as that one is behaving much better and the price performance is much stronger. Prefers Fiserv (FISV-Q) and Fidelity (FIS-N), which are both specifically in financial technology, which is the right space as digital transactions are growing 10% every year. The banks have held back on spending on technology over many years, and are now re-accelerating their spend.

(A Top Pick Nov 2/15. Down 22.28%.) Got stopped out last January. This is one you need to be out of. Anything that was providing outsourcing services into the US was impacted by the election. This company has a lot of operations outside of the US.

(A Top Pick Dec 14/15. Down 3.54%.) Early last month, there was a press release that said there was an internal bribery probe in the company, and that their CFO (since their IPO of 1998), who became president, had resigned. That was a red flag to him.

They are on the business technology outsourcing side, for financial services firms, healthcare firms, mostly figuring out how to use technology to make your business better. There were a few headwinds, and those are starting to lapse. They had an activist investor come in, and the board put together a plan to derive value creation, and that is starting to work. She sees quite a few more legs on this. Yield of 1%. (Analysts’ price target is $70.)

She sees a lot of good, long term, secular drivers. As technology permeates every business and every industry, these are the guys that come in and explain how a company can use technology. Historically, this was just on the expense side and how to get more efficient, but now use technology to generate revenue. This has been big on the financial services side with banking, insurance and healthcare. In the last year or so, there has been a lull in that kind of spending, but that has come back. An activist shareholder came in and put some nice targets out. The company has been executing well, and they still have a lot of room to run on some of their targets.