Reconnect With Resources Connection?

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 (NASDAQ:RECN) has fallen to a point where your cheapskate narrator is getting interested in the shares.

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 (NYSE:ACN) has demonstrated on a larger scale). So too are ongoing cross-selling efforts -- companies may come for the SOX compliance help, but they stay for things like supply chain management, audit, and forecasting services.

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 (NYSE:IBM). And while there's plenty of available competition from companies ranging from Kforce (NASDAQ:KFRC) to Robert Half (NYSE:RHI) to MPS Group (NYSE:MPS), I think this company's "Big Four" heritage is an advantage.

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.

Resources Connection is a Motley Fool Stock Advisor selection. Accenture is a Motley Fool Inside Value recommendation.

For more Foolish thoughts:

• Accenture Doesn't Screw Up
• Resources Connection Gets Some Static
• Huge Returns for the Lazy

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).