Once a year, the final weekend of March Madness (which almost always occurs in April) generates a pilgrimage of college basketball fans to a different designated location. This year, fans, students and alumni from Duke, West Virginia, Michigan State and Butler are already beginning to descend on Indianapolis, IN for this year’s Final Four.
Indianapolis, better known for its annual Indy 500 race over Memorial Day weekend, will host the NCAA men’s basketball championship for the 6th time beginning this Saturday, with the final game held Monday evening. It is an appropriate locale for the event; Indiana is a state known for its charming small towns where a basketball hoop stands in nearly every other driveway.
It is also the 14th largest city in the U.S., and as such boasts a reasonably formidable business district, with headquarters of many household-name corporations both downtown and in nearby Carmel, IN. But which of these have top-rated stocks that investors should consider adding to their portfolios?
In honor of this year’s Final Four — and to assist those who may have lost big by picking Kansas or Kentucky to win the Tournament — we hereby list our top Zacks-rated companies headquartered in Indianapolis:
Interactive Intelligence (ININ)
This enterprise-side software developer has experienced remarkable growth since its inception in the mid-1990’s. Known largely for its Customer Interaction Center (CIC) application suite, Interactive enjoys a growing presence in contact center automation, enterprise IP telephony and business process automation.
Contact centers (formerly referred to as “call centers”) can, of course, now be found all over the world, and Interactive Intelligence conducts business in more than 80 countries for roughly 3000 clients. It has been recognized by Gartner as a leader in IP contact solutions, and its growth story has been lauded in several publications, from BusinessWeek to Fortune Small Business.
However, Interactive has just this week dipped to a Zacks #3 Rank and a Neutral recommendation (from Zacks #2 Rank and Outperform, respectively). The downgrade reflects a lack of positive estimate revisions – the current Zacks Consensus Estimate for this year of 94 cents per share is little changed in the last few months. However, the full-year 2010 estimate is up 40% from the previous year’s level.
Brightpoint, Inc. (CELL)
Headquartered in nearly Carmel, IN, Brightpoint, Inc. is a Fortune 500 (as well as one of “America’s Most Admired Companies,” according to Fortune) which provides logistics and distribution to the wireless technology industry. This is one of the very few sectors to have experienced consistent levels of high growth during the long recessionary period.
Just this week, Brightpoint has announced it is assisting Research In Motion (RIMM) with expanding BlackBerry smartphones in highly-populated Indonesia, on the Pacific Rim. This follows a deal Brightpoint struck earlier this year to distribute Nexus One phones globally, and is the main reason for its upgrade to a Zacks #2 Rank on March 31.
Just prior to its fourth quarter 2009 earnings report, Brightpoint stock dipped below $6 per share (at which time it was a Zacks #4 Rank). Upon beating the Zacks Consensus Estimate of 15 cents per share by 40% in that report, CELL bounced back within two weeks to a $7 per share range, and has since hovered around $7.50. The stock is attractive based on conventional valuation metrics as well, highlighting its long-term value proposition.
The Steak n Shake Co. (SNS)
We still consider this old-timey burger and milkshake chain (founded in 1934) an Indianapolis company, even though its Chairman and CEO, Sardar Biglari, is taking steps to morph the firm into a Berkshire-like conglomerate (including its recent 1-for-20 reverse stock split), naming it after himself (Biglari Holdings, with proposed new ticker BH) and setting up corporate headquarters in San Antonio, TX.
In fact, Biglari’s big vision has set the company on an impressive upward trajectory over the past year-plus. The company’s recent successes — including an average 163.7% positive earnings surprise over the past 4 quarters — have more to do with Biglari’s business acumen than have growth in Steak n Shake franchises or the quick-service restaurant industry in general.
No analyst estimate revisions have occurred over the past 30 days, but following the company’s nearly 300% positive earnings surprise in its fiscal first quarter 2010 (ended December), revisions catapulted to where they are currently, at $4.87 per share for the second quarter. The Steak n Shake has a Zacks #1 Rank at present, and shares just last week hit a new 52-week high of $396.90.
The Finish Line (FINL)
But the current champion of Indianapolis stocks is, fittingly enough, a sports-themed company. The mall-based shoe and fitness retailer has been on an up-trend lately thanks a recent string of very good news.
First, the company posted fiscal fourth quarter 2010 (ended February) non-GAAP earnings of 61 cents per share, beating the Zacks Consensus Estimate by 27% and well above the 41 cents per share posted in the same quarter a year ago. Then, its comparable-store sales through the first 3 weeks of March rose 15.5%, compared to a 1.2% drop in the year-ago term.
Successful cost containment initiatives, doubling its cash and marketable securities from $116 million to $234 million in the past year and even a rare dividend yield (1%) for a specialty retailer are all reasons behind The Finish Line’s Zacks #1 Rank and Outperform recommendation.
Nothing encapsulates FINL’s improved outlook than the solid ‘magnitude’ of earnings estimate revisions. The current Zacks Consensus Estimates for this year and next $1.04 and $1.15 are up 19 cents and 25 cents, respectively, in the last 7 days alone. We see a similar upward trajectory when look back 30 and 60 days as well.
Read the full analyst report on “ININ”
Read the full analyst report on “CELL”
Read the full analyst report on “RIMM”
Read the full analyst report on “SNS”
Read the full analyst report on “FINL”
Zacks Investment Research
