NV5 Global: "Bell-Ringing Buy"

05/27/2016 7:00 am EST


Tom Bishop

Founder, BI Research

I look at a lot of factors when it comes to making a selection for a new recommendation, but I don’t think I’ve ever seen a stock run the table like our latest pick, which literally rang every bell along the way, asserts small cap expert Tom Bishop, editor of BI Research.

NV5 Global (NVEE) is an engineering and construction management company. The company has been in business for 65 years and went public in 2013.

It is a provider of professional and technical engineer-sector clients in the infrastructure, energy, construction, real estate and environmental markets.

NV5 clients are evenly geographically dispersed and include federal, state, municipal and local governments as well as private property owners and quasi-public agencies in the fields of education, healthcare, energy and utilities.

Projects can include wastewater systems, sports facilities, military base renovations, utilities expansion, renewable energy, pipelines, education and healthcare facilities.

Investors Business Daily gives NV5 a composite rating of 99. That’s the highest. Ding! Its relative earnings strength rating is 96 and its relative (stock price) strength rating is also 96. That trio is about as good as I’ve seen. Ding!

In addition Value Line ranks it 1, Zacks ranks it 1. Ding. And yet only two Wall Street analysts follow the stock (so far), so it is relatively undiscovered. One rates it strong buy, the other buy. Ding, Ding!

The 3- 5-year growth rate is projected at 20%. Meanwhile the PE has not gotten ahead of itself, with a price to earnings growth (PEG) ratio of PEG of 0.75. Ding!

In addition, the backlog increased 82% in 2015 to $155 million, earnings are fully taxed and NV5 has little debt, with a debt/equity ratio of 0.08. Ding, ding!

NV5 is acquisitive. Its industry is very fragmented with 144,000 engineering firm in the US creating a robust pipeline of acquisition opportunities. All this translates into a bell ringing buy rating.

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