Those who know me well will chuckle when they read this, but patience really is one of the top hallmarks of a long-term winning investor. Chase stocks and you end up chasing your tail; wait for the right opportunity to come along and you can make some pretty impressive gains. What this somewhat obtuse prelude means is that Resources Connection
Why has the stock been falling? Well, I don't presume to speak for all selling shareholders, but I think you have a couple likely answers. Growth momentum has been spotty at best, so that's a turn-off to those who subscribe to a consistency-of-growth approach. What's more, more than a few people see Resources Connection as a one-trick pony -- a consulting business geared to take advantage of the initial spike in demand for SOX services, but not equipped for long-term success.
In the meantime, this quarter's performance won't likely change any minds. Revenue was up a bit less than 11%, while operating income once again fell (this time by 4%). The company continues to absorb the costs of new offices and bringing its corporate infrastructure up to speed with its growth plans.
Maybe I've drunk too deeply of the Stock Advisor Kool-Aid, but I still think the company is more than just a SOX play. International revenue is still only about one-fifth of the total, and that's a growth opportunity (as Accenture
What's more, Resources Connection has a niche. They can (and will) handle business that just wouldn't interest huge players like Accenture or IBM
This is admittedly a tough market in which to step up to buy any stock, let alone one that isn't dirt cheap. Still, if Resources Connection proves that it's really more than a SOX play -- and that there is a valuable niche for smaller-scale consulting services --patient investors should see their rewards in time.
For more Foolish thoughts:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).