Computer Modelling Group Ltd

I first bought this stock (TSX-CMG,) in November 2008 and bought some more in March of 2009. My total return to date on this stock is 30% per year. This is a small cap stock that is growing fast and is also a dividend paying stock. This stock will, of course, be more risky that most dividend paying stock, so be careful. Only buy this stock if you can afford to take the risk of owning a small cap stock.

In looking at growth figures on this stock there is nothing bad to say. It is currently growing fast, although the growth for the financial year ending in March 2010 has not been as good as for other years. For example, the growth in revenue for the last 5 and 10 years has been 21% and 18% per year respectively. Cash Flow has also done well, with the growth for the last 5 and 10 years at 21% and 40% per year respectively.

This stock has also been no slouch when it has come to dividend growth. They just started to pay dividends in 2004 and the 5 year growth figure is 50% per year. The current dividend yield is decent at 4.1%. I should point out the dividend yield on high stock prices over the past 5 years is 3% and the dividend yield on low stock prices over the last 5 years is 5.3%. This stock has grown quickly and the dividends have also grown very quickly. At some point, a small cap will grow more slowly, so past growth cannot be used to determine future growth.

This stock also has a strong balance sheet. The Liquidity Ratio and the Asset/Liability Ratio for 2010 are both good at 2.44 and 2.56 respectively. Any ratio over 1.50 is good, so these are more than good. The last thing to talk about is the Return on Equity and here again; this stock has done very, very well. The ROE for 2009 is 190% and the 5 year average is 44.5% per year.

I am please with the performance of this stock and I intend to hold on to this for quite sometime. Please note again, this is a risky stock, so only invest in it if you can afford to take a risk. Another thing you could do, for fun, is invest a bit of money in it. After all, investing should be fun too.

It is a computer software technology and consulting firm engaged in the development and sale of software. They have 250 Clients in 45 countries. Their reservoir simulation software assists petroleum companies to extract an increased amount of oil and gas from their reservoirs. Its web site is here Computer Modelling. See my spreadsheet at cmg.htm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.