 Good day fellow investors! In this video I'll first discuss why I don't really like stock screeners even if I'm a value investor and then I'll discuss a stock that doesn't have linear dividends, that doesn't have linear earnings, currently it has a loss so it wouldn't come up in a stock screener but if I put whatever the company has been doing linearly divided over 10 years we would be talking about a stock with a price earnings ratio below 10, a dividend yield above 7.5% and huge growth so a very very interesting stock. However that stock won't come up in your stock screener. Starting with stock screeners value investors like me would love to find a stock with a low price to book value, low price to earnings ratio, high dividend, lots of cash and everything perfect with no risk of course. However if you put those parameters in a stock screener everybody gets them, every value investor in the world gets those parameters and then firstly it's unlikely that something good drops into that basket secondly you must really understand the risks and thirdly if something is really undervalued the parameters don't have to be linear to drop into a stock screener like the company that I will discuss now. So the only thing for me which I think is really the best way to invest because shortcuts and investing are not a great route is to research every stock on the market of course I have time I have the time to go stock by stock by stock by stock on every stock market I did it from for Europe I did it a few times for the US stock markets and I constantly do it around the world and this research stock by stock by stock has brought me to today's stock pick which is Sintel. Sintel is an IT operator that sells most of its services in the US but everything is done in India there is a company presentation on YouTube the link is in the description below so check that so in order to get what the company is doing so that I think they present it much better than I would discuss it. So let's look it from an investor perspective and what's interesting about the company if you look at the stock price it has significantly declined in the last year and a half because the revenue growth has slowed down a bit and the company paid out a dividend of $15 per share $15 per share is 75% of the current market capitalization so this is a company that in 2016 paid 75% of its current market capitalization in a special dividend all in one go and that you don't see in a stock screener because if I would take those $15 of dividends and spread them over the past 10 years I would get a dividend yield of around 7.5% which would be great for any kind of stock and even better for a growth stock for a stable stock for a company that has American Express FedEx as its main customers so a very good good business with a good business model at the dividend yield of 7.5% so really undervalued from this current market perspective why did the revenue fall well IT services are always cyclical companies especially in a late part of an economic cycle and Sintel mainly caters to financials are not that happy to invest they try to squeeze every dollar and improve the margins now when the cycles they are going to try to save by investing more in software and financials and that's why also as the cycles of change go in the technology business so also revenues for a company like Sintel will be volatile however those has been have been growing for a long time just a quick look at the locations mainly focused on North America 9% of sales are in Europe and the development centers are mostly in India you can see here how the business has been growing very very fastly especially in the last 10 years and peaked revenues now a little bit in 2017 but the company is really developing itself in order to provide the best service to its customers and I think it's normal to have volatile revenues in the sector and therefore we in the long term we should expect growth the company is turning digital to improve its value to customers if you are very interesting in the company feel free to dig in and see what the company is doing and how it compares to competitors and if they can keep their margins stable what's very important is the revenue has been growing up except for in the last quarter and in the last year earnings per share have also been growing up and then you see a drop in 2016 to 0.68 dollars this drop is due to a tax charge of 260 millions related to the dividend and because they have repatriated a lot of their international earnings so if we would eliminate the international earnings the earnings per share would be and I'll take the expected earnings for 2017 and they would be around 1.7 so at the current stock price of 19 the price earnings ratio is around 10.11 operating income as you can see has been stable so the earnings per share drop that won't show this company in a stock screener is just due to one off tax charge the revenue profile banking and financial services FedEx American Express top customers digital services are growing so the company is heading forward and will probably continue to grow in the future just a quick look at the fundamentals the company has increased its liabilities by about 400 million in order to pay the dividend and you can see the total assets the first top line decreased from 1.4 billion to 400 million where they paid out the cash they had accumulated during the last 10 years and they have taken a loan to pay a higher dividend the same as apple is doing taking a loan to pay for the dividends so this is a company that's making money continues to grow has had some headwings at the moment but I think it's extremely cheap for what the company is doing and what are the prospects of the company in the future and let's discuss some catalysts as soon as the tax charge is eliminated from the last four quarters the company will jump up again into stock screeners and then people will see oh look an Indian company US company with operations in India selling software in the US growing at 10 times in the last 10 years is selling at the price earnings ratio of 11 they are producing a lot of cash because they paid 1.2 billion dividend in 2016 so we can expect the same thing in the future I think the company won't stay at 19 that long in addition the company is mostly owned by the founder so 68% is called held by insiders and insiders they want to increase shareholder value this is really a management that focuses on increasing shareholder value not the stock price so the stock price has fallen very low much more than the paid out dividend what has the management started a buyback program so they think it's better now to buy back stocks when they're cheap than to pay a dividend so the management is really looking for ways how to increase their shareholder value and as we are talking about the management a very interesting sign from insider trading as I said 65% of the company is owned by insiders and insiders have been buying much more than selling net activity 483 000 stocks bought 127 28 000 stocks sold so insiders really think this is very cheap and now is the time to buy the stock let's discuss the risks of course it's always important to discuss the risks in the company 75% of revenue comes from 10 customers 22% of revenue comes from american express 14% of revenue comes from street bank and federal express corporation adds 11% of revenue so if the company loses one of those clients then it could really hit revenue and that's a risk that everybody mentions however it's very difficult and costly for an operator like american express to change its it service provider because another company would have to learn everything so I don't think they will lose clients and if we look at their revenue over time they didn't lose clients in the last 10 years so that's a very good interesting margin of safety another risk from their annual report is that the company expects fluctuations in revenues depending on what the customers are doing their plans so we have to also expect fluctuations in revenue however in the long term the company is focused on growth and will continue doing so very very interesting company dig deeper if you want a dividend yield of 7.5% as I said they now are investing 60 million in buybacks which is around 3.5% of an indirect yield from buybacks because the management things the stock is cheap and the management is buying the company let me compare this stock with other picks from this channel so I always look for a 10% return on the company from earnings from dividend whatever and I expect Sintel to grow at 10% in the future so the average earnings from here would be 2.18 if they manage to improve margins which they could as earnings have been much higher a few years ago than even better however I'm always conservative on that the target my target price for a 10% return from there onwards is 21 if Sintel returns to a normal market valuation then we are talking a price of 40-50 in the next few years but you know me I'm always conservative the company is privately owned so the potential catalysts are a takeover further buyback or dividends accumulation of growth the margin of safety I don't think it can go lower because it's a good business stable good business with good customers it is much better than few other companies that we discussed but the price should go much lower in order to reach the risk reward from other companies like Amira Nefsson and others thank you for watching leave your comments below and I'll see you in the next video