Tonight, at 11 p.m. EST, perhaps some lucky person(s) will win the Mega-Millions Jackpot of $291 million. Whew, how nice would that be? For some readers that might be chump change, but for the rest of us…
According to the Mega-Millions' website, the cash payout is $157 million. Whenever the lottery numbers start to pile up and become ridiculous, iStock likes to see which publicly traded company we'd buy with the winnings.
For the sake of our shopping spree, we don't pay a premium so we can get the most for our new found riches. Let's turn to our trusty stock screener to see how many companies have a market cap of $157 million or less. Ok, we have a deep pool to choose from with 3,393 names.
Businesses are in business to make money, except Amazon.com, Inc. (NASDAQ:AMZN). So, any buyout target must be profitable during the past year. That minor demand reduces our list quite dramatically, only 686 made cut two.
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Profitability in the past is one thing; any new business owner wants to make money tomorrow, too. Analysts believe 79 of our 686 will increase the top line in the next year, and 49 of the 79 will see a fatter bottom line, too.
Wow, from 3,393 to 49 just by insisting on turning a profit and expectations of growth tomorrow, too. That's somewhat scary – no?
Next, we'll turn to valuation. As we mentioned up top, iStock is economical with our hard earned lottery winnings. We don't want to pay more than one times sales, which leaves 21 with price-to-sales ratios of one or under.
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Market pro Warren Buffet concentrates on equities with return-on-equity (ROE) of 14 or more, only a handful remain.
Sticking to our thrifty theme, a forward P/E that's less than projected EPS growth sure would be nice. Ahh, that leaves two companies: Information Services Group, Inc. (NASDAQ:III) and ! Vertex Energy Inc. (NASDAQ:VTNR).
Of the two, our preference would probably be III as it trades more daily volume. Information Services provides fact-based sourcing advisory services in the Americas, Europe, and the Asia Pacific. It offers research, benchmarking and analytics, strategic consulting, and managed services with a focus on information technology, business process transformation, program management services, and enterprise resource planning.
The management services company's market-cap is $150 million (leaving us some walk around money), is expected to grow sales by 8.50% and EPS by 53.8% in 2014, is valued at 0.73 times sales, produces a ROE of 18.64%, and has a forward P/E of 20.18, which is less than half of projected EPS growth.
There you have it. If you win the Mega-Millions lottery, Information Services Group, Inc. (NASDAQ:III) could help your newly acquired gold coins generate more gold coins.
Good Luck!
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