An Emerald Stock in a Sea of Red

10/15/2008 12:01 am EST

Focus: GLOBAL

Paul Goodwin

Emerging Markets Specialist and Analyst, Cabot Heritage Corporation

Paul Goodwin, editor of Cabot China & Emerging Markets Report, likes the growth at an Irish medical company.

There's not much any of us can do to affect the course of this historic market meltdown except cross our fingers and stay out of the way.

But we can resolve not to be the victims of market forces anymore. After a downer message like that, it may seem a little incongruous to be recommending a stock. But an investor with a system knows that research never stops. Even when there's no buying going on, the preparation for buying has to continue. So here's an idea for your growing watch list of stocks.

My investing idea is Icon (Nasdaq: ICLR), an Irish company that provides support for pharmaceutical companies, biotechs, and medical device makers that need help with product development, research, and clinical trials. Icon has been consistently profitable, with positive earnings for more than a decade.

And after a modest rough patch in 2004-2005, the company has booked 11 straight quarters of earnings growth, finishing with a 35% pop in earnings on a 48% gain in revenues.

The biggest attraction, for me, is the stock's status as a tractor, a stock that just keeps on grinding out gains, rain or shine. Since the stock bottomed at $9 in late 2005, it has worked its way to 40 (the shares have been as high as 44.78 in the last 52 weeks, but suffered along with the rest of the street, closing at 32.78 on 10/14/08-Editor).
 
The stock hasn't shown up in any Cabot growth advisories because its trading volume (it averages just 267,000 shares a day) is too low for our screens. However, since the trading volume screen is mainly there to eliminate excessive volatility, and ICLR hasn't had excessive volatility, it seems like a wash.

Medical companies have been a moderately bright sector in this gloomy market, and Icon's position as a supporter of research insulates it from the huge moves that drug makers can experience. With a P/E of 37x, it's not cheap, but great growth stocks never are.

A record number of institutional investors have snapped up 19 million of ICLR's 46 million-share float. The stock just split two for one, which sometimes marks a temporary price peak, but there are no signs of a (big sell off) yet.

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