Infosys Technologies LTD. (INFY)
Infosys is the Indian master of IT outsourcing. Their consulting arm operates internationally in such countries as Australia, China, and the United States. This company is in direct competition with United States’ corporation Accenture.
So why is Infosys a good buy?
With earnings season going on, Infosys posted 5.9% revenue growth for Q3 2006, and was added to the NASDAQ-100 Index in December. They are the first Indian company to be listed on any major global index. If that isn’t a message that the Indian economy is moving out of emerging into major markets, I don’t know what is.
Many would hate investing in outsourcing firms because it is an evil word in the US. Nonetheless, it is a very large market that you cannot ignore. The CEO of Infosys has been speaking at various media outlets about how the India market will not cool.
The one and only negative stock signal is the high P/E ratio (43.60) when compared to other stocks such as Accenture (ACN). However, this negative signal is a small one, and I don’t hold a lot of faith on just the P/E ratio. I would say their price to sales multiple outweighs the P/E ratio, which is very high for stocks on the whole, not just the consulting sector.
INFY 5 Year Chart
This post was contributed by Ryan Donnell.