When in doubt, hire a consultant …

By Travis Johnson, Stock Gumshoe, October 23, 2009

This week I thought I’d take a few minutes to urge you to give a second look at one of the worst-performing stocks I’ve profiled in this space: FTI Consulting (FCN)

FCN is a midsize consulting company, it’s just barely larger than what most people consider “small cap” (right around $2 billion) but has a global footprint and has been one of the fastest-growing stocks on Wall Street for ten years. So why look at it now?

Well, I don’t have a time machine, unfortunately, so I can’t tell you to go back and buy FCN in 1999 when it had a market cap of $16 million … but I do think the shares have gotten beaten down far more than they deserve, that the opportunities I outlined back in March, which we now know was the bottom of the market (at least for now), are still there, and that the company has the opportunity to do a booming business with failing and bankrupt firms as well as with growing companies if this recovery is really taking hold.

The stock has not done terribly this year when considered in a vacuum, but none of us lives in a vacuum — the shares are down about 10% from when I wrote about them, but the S&P 500 is up about 35%, so this is, compared to the market, the worst performer I’ve written about this year (it’s not my worst idea ever — GSI has done worse, but I wrote about that one back in August of 2008). So why do I think the shares deserve another look now?

To put it briefly: They’re cheap, they’re growing, and they should have no shortage of business coming their way in the next year.

FCN is a consulting firm that is actively investing in building a global business, and in diversifying across all kinds of business, economics, litigation and technology consulting and support — but one of their major business areas is restructuring and bankruptcies. In fact, one of their large clients right now is CIT, which certainly gets a lot of press for its restructuring crisis, especially now that Carl Icahn may be stepping in to offer them yet another lifeline (with some strings attached, one assumes).

And while they do have an increasingly broad book of business in high-end corporate services, the immediate opportunity for upside ...

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