CGI Group’s stock is too expensive right now, says this portfolio manager

CGI Group (CGI Group Stock Quote, Chart TSX:GIB.A) got hit by the tech selloff that closed out 2018 but the stock is now back to its old chart-climbing ways, hitting new highs since early February. That pace makes it tough for investors to jump in, says Kim Bolton, president and portfolio manager of Black Swan Dexteritas, who spoke to BNN Bloomberg about the stock.

“We don’t own CGI but we have in the past,” Bolton told BNN Bloomberg Monday. “This is in the consulting services sector and there are a number of significant players. The ones in North America that always come to mind and are always on the RFPs are CGI and Accenture.”

“Accenture has done a fabulous job in keeping the ball rolling,” he says. “They bought [OCTO Technology], a French company, about three years ago and they were able to expand their footprint over through Europe.”

“CGI is a little bit expensive at this stage. If you can actually get it down in the low $70.00s that’s where we’d like to buy,” he says.

Since the end of October, CGI has gained 17.7 per cent, rising from a low of $75.54 to $88.95 as of late-day trading on Tuesday.

CGI and Accenture have both provided excellent returns in recent years. Since January 2014, CGI’s share price has gone up 154 per cent, while Accenture is up 101 per cent over the same period.

CGI last reported its earnings on January 30, where its first quarter fiscal 2019 arrived in line with analysts’ estimates. The company reported revenue of $2.96 billion, a 5.2 per cent year-over-year increase, and Adjusted EBIT of $439.2 million, a 7.5 per cent year-over-year increase.