Strategic CIO // Executive Insights & Innovation
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8/14/2009
08:29 AM
Bob Evans
Bob Evans
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Accenture Named Top Growth Stock In Wake Of Restructuring

Motley Fool's pool of 135,000 investors has named Accenture its top growth stock just two days after the company reorganized around three new growth categories: management consulting, technology, and business process outsourcing. While the poll's conducted each week, the timing relative to the new org plan is a big endorsement for Accenture.

Motley Fool's pool of 135,000 investors has named Accenture its top growth stock just two days after the company reorganized around three new growth categories: management consulting, technology, and business process outsourcing. While the poll's conducted each week, the timing relative to the new org plan is a big endorsement for Accenture.Noting that Accenture has received 1,131 ratings of outperform versus only 44 underperform ratings, Motley Fool had this to say about the $23 billion consulting and outsourcing company:

"Whether inspired by recession or motivated by profit, businesses around the world are looking to become better, faster, and stronger. And Accenture is one of the chief players helping them get that done. While Accenture has shown good revenue growth, it's also become more efficient itself and notably improved its profit margins."

Three months ago, one of the Fool's top advisors offered a glowing description of Accenture:

ACN (Accenture) - best in class IT consulting and outsourcing company, head and sholders above all its other competitors. The next closest competitor is IBM. You can think of them as GS [Goldman Sachs] of IT consulting in terms of talent.

The company has shown consistency in its earnings and still has a lot of growth potential should the economy turn. Its price currently at a depressed level, but the fact that it wasn't completely oblitarated in the sell off (only lost 30% vs. 50-70%) is a sign of resilience. Current P/E is 10. The company pays dividend of about 1.5%. You would need to hold it at least a year into the new bull market to realize its full potential because IT service tend to come back only when the new bull market is well established. A good stock for long-term oriented portfolio.

Earlier this week, Accenture announced a restructuring that creates what the company calls its three "growth platforms" of management consulting, technology, and business-process outsourcing.

Accenture's new Technology platform is a combination of its Systems Integration & Technology business and two parts of what had been its Outsourcing business: application outsourcing and infrastructure outsourcing. The new Technology platform is headed by group chief executive Kevin Campbell.

A third outsourcing sector - Business Process Outsourcing - becomes a standalone business for Accenture, which has combined its industry-specific as well as its cross-industry BPO services into a this single business unit. Headed by group chief executive Michael J. Salvino, the new BPO unit was created "to recognize the importance of BPO to Accenture's long-term growth," a company statement said.

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