Stocks: FDS, IHS, CME, etc.

Factset -- this is a wonderful business -- one of the best ever -- they have had sequential (as in quarter over quarter) revenue growth for some ridiculous number of quarters in a row -- say 100 or more. That is a record of consistency unmatched by I suspect any other company out there. FDS also has very high free cash flow margins, very high return on assets and big barriers to entry. I have been an extremely loyal user for most of my 12 years in the business (only exception was when my firm was too small to afford a Factset subscription).

Factset has expanded from providing analytical tools and access to data to evaluate individual stocks to tools to evaluate portfolios; to evaluate potential M&A deals; to help companies perform investor relations functions; and many many other functions.

But I don't know the odds of them maintaining their revenue growth record in this coming environment -- too many investment bankers, too many hedge funds, etc. only good news is that they don't have much exposure to fixed income so that could be a new growth area. I don't want to panic given their track record but as the firm grows it gets harder to maintain growth patterns.

IHS -- is this the Factset of the energy and defense and aerospace industries? similar subscription based model offering access to critical info but I just don't know how critical the info is -- as a user of Factset as well as some of Factset's competitors, its very easy for me to know where Factset fits in and how they compare to their competition. FDS is the gold standard by which all customer service/support should be judged. They are expensive though so not everyone can or is willing to pay up for it. cheaper solutions that are not as robust exist -- those cheaper solutions probably meet the needs of many users but for some its not enough -- they need the power and flexibility that FDS offers.

The neat thing about IHS is that they are exposed to other areas than finance -- energy and aerospace and defense. They also have much higher percent of revenues from International clients -- 47% vs. 28% for FDS. They also have lower margins than FDS as well as several other similar business models. IHS's profitability has been improving, which boosts earnings growth above that of revenues. stock is not cheap however. will be doing some more work on this one.

CME -- some are arguing that volumes will drop based on the idea that the cost of using derivatives has increased and that anything with a rising price ends up with less demand. Its quite possible but I'm skeptical that the growth rate of derivatives will slow -- just too flexible and too many advantages to using them. I still like this one.

Others I have done some reading on this weekend include: ACM, MSM and MIC. So far I have been less interested with them for various reasons. Will continue to keep reading and reporting. hope you are making money this year.