Friday, June 24, 2011

Computer Modelling Group Ltd

I own this stock (TSX-CMG, OTH-CMDXF-). I bought this stock in November 2008 and some more in June 2009. This is a small dividend paying technology company. I have made a total return of 48% per year on this stock. About 6% per year would be attributable to dividends. It was not a large investment.

This is a high risk investment. They sell reservoir modelling software. Things can change rapidly in the software industry, so if you invest in this company, you need to keep an eye on it. I happen to like tech companies, but I also understand the risks. Also, just because past returns have been very high, does not mean that future ones will be also.

The growth rates for this company in Revenue, Earnings, Dividends, Total Return, Cash Flow and Book Value are very high. The lowest is in Book Value and the 5 and 10 year growth is 16% and 21% per year, respectively. Next in growth comes Revenue per share at 22% and 18% per year, respectively. Most of the rest is 30% or above growth per year.

This is a fast growing company. They are also paying out most of what they get in earnings and cash flow in dividends. The Payout Ratio re earnings has a 5 year median rate of 93% and the Payout re Cash Flow has a 5 year median of 79%. For the financial year ending in March 2011, the respectively Payout Ratios were 101% and 85.8%. The dividend growth rates over the past 5 and 6 years are 50% and 46% per year. They also often give out special dividends. The dividend yield is currently at 3.23%. The company has a 5 year median dividend yield of 4.18%.

The other thing of note is the Debt Ratios and they are very good. The Liquidity Ratio is 2.47 and the Asset/Liability Ratio is 2.56. The Leverage Ratio is 1.64 and the Debt/Equity Ratio is 0.64. They are debt free. The stock has recently split 2:1. This is the second stock split. The other stock split was in 2008.

I have done very well by this stock. I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.

Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. 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.

1 comment:

  1. Susan,

    You said that your blog is meant for educational purposes only. How true! Reading your blog, I am being educated everyday, and by a great teacher. Thank you.