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Accenture Plc (ACN), Xerox Corporation (XRX)–Roundtable: One Stock to Buy in September

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As we do each month, we asked a handful of our top analysts across sectors for one stock that looks especially compelling right now. Here are the companies they singled out.

Jim Gillies: Accenture Plc (NYSE:ACN) is one of the world’s largest management consulting, system integration, and outsourcing companies, with a client list comprised of most of the Fortune Global 500. A proven winner, Accenture Plc (NYSE:ACN) has delivered 14.8% annualized returns (including reinvested dividends) over the past decade.

Accenture Plc (NYSE:ACN)

And yet, its most recent quarter was received so poorly that the stock price fell nearly 14% in a single trading session (it has since recovered about half its drop). This reaction baffled me. Even with somewhat slowed top-line growth and a marginal downward revision to full-year expectations, it was a perfectly fine quarter: Earnings rose 17%, margins expanded, and operating cash flow rose nearly 24% year-over-year. The balance sheet now sports nearly $6 billion in cash (against no debt), and the company continues to be awash in free cash flow.

This last part is particularly important because Accenture Plc (NYSE:ACN) has a long history of deploying its copious cash generation in the service of shareholders. The company has aggressively repurchased its own shares over the past decade, reducing its diluted share count by over 27% (about 3.1% annually). It also established its dividend in 2005 and has raised it annually at a compounded 25% clip. Expect this shareholder friendliness to continue when the semiannual dividend is declared later this month. Accenture is truly a stock to buy and hold for long-term excellence.

Rick Munarriz: It’s been a wild summer for LightInTheBox investors. The online retailer went public at $9.50 in June, traded as high as $23.38 by mid-August, but crashed 40% in a single day last month after posting disappointing quarterly results in its first outing as a public company.

Let’s provide a little color before we dive into this seemingly disastrous quarter. LightInTheBox is based in China, but more than 80% of its sales are made outside of Asia. Americans and Europeans are taking to LightInTheBox’s high-tech housewares and custom-tailored cocktail dresses that are sourced cheap enough in China to be shipped worldwide at no additional cost.

Revenue for its debut quarter climbed 53% to $72.2 million, shy of the $75.8 million that analysts were targeting. That’s not awful, but then LightInTheBox warned of a sequential dip in revenue for the current quarter. Ouch!

However, LightInTheBox is still profitable. The model works. It’s trading at a forward earnings multiple in the teens. A sell-off was warranted after last month’s crummy report, but the pessimism is overdone. LightInTheBox will bounce back.

Tim Beyers: Between the billion-dollar box offices and a rich TV lineup from the likes of Time Warner Inc (NYSE:TWX) and The Walt Disney Company (NYSE:DIS), there’s rarely been a better time to be interested in media stocks. And not just the Big Two. For enterprising investors willing to take on a little added risk, Lions Gate Entertainment Corp. (USA) (NYSE:LGF)  looks like an interesting bet.

The studio’s lineup includes not only three more entries in The Hunger Games series, but also joint production deals with AMC Networks Inc (NASDAQ:AMCX) for Mad Men and Netflix, Inc. (NASDAQ:NFLX) for the new original series Orange Is the New Black. Mix in a string of low-budget and ridiculously profitable horror films and you’ve got a Hollywood player whose outside-the-lines production sensibility resulted in 70% revenue growth last year and 56% growth over the trailing 12 months.

Importantly, that growth comes at what I consider to be a reasonable price: less than 2 times sales, and about 22 times next year’s average earnings target.

Jim Mueller: Generac Holdings Inc. (NYSE:GNRC) sells backup power generators to both homes and businesses, as well as powering temporary lighting systems to folks like those working on our highways in the overnight hours. Its backup generators can connect to a home’s natural gas supply and use that when the system automatically starts when the power goes out.

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