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Technology Stocks : BARRA: Investment Software and Consulting
BARZ 0.0001000-90.0%Aug 16 5:00 PM EST
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To: Czechsinthemail who wrote (6)8/26/1997 1:20:00 PM
From: hasbeen101   of 60
 
In quantitative terms, I guess we can look back on the performance between 1995 and 1997:

Revenues more than doubled from 51.8 to 104.8 million.
Earnings per share almost tripled from 51 to 145 cents.

But to me the strongest things in favor of this stock are qualitative. BARRA totally dominates the "rocket science" end of the investment software market. Building a reputation in this market takes many years, and BARRA have this hard work behind them. With little competition and high barriers to entry, they can price their products very profitably. They are also starting to benefit from economies of scale.

When a company dominates it niche and achieves economies of scale, it can often achieve amazing margins. The best comparison I can think of is when IBM dominated the mainframe market during the seventies and eighties, producing stunning sustained profit growth.

Also, I know from personal experience that behind the facade there are a lot of totally clueless people in the investment industry, and they are prepared to pay a small percentage of their billions if someone smart can tell them what to do. BARRA has impeccable credentials to provide high-margin consulting services. The RogersCasey subsidiary advises pension fund sponsors, which gives BARRA huge opportunities to sell their software and services to pension funds.

Boiling it all down, there is potential for this company to show huge growth for the next decade or more. It is rare these days to find a company that effectively has very little competition.
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