Investing in Good Governance: Two Stocks to Watch

By Kapitall  SEP 19, 2013 9:30 AM

These stocks exhibit good corporate governance and are seeing faster growth in revenue than accounts receivable year-over-year.


Last week we focused on one of our favorite tools, CSRHub. Considering the seemingly never-ending stream of bad behavior emerging from company board rooms, and the reminder this week of Lehman Brothers’ collapse, it felt appropriate to use their site again when screening for stocks.
For this list we turned to CSRHub’s governance ratings, which ranks a company based on criteria including leadership ethics, executive pay, transparency, board composition, and stakeholder treatment.
We searched CSRHub for only US-traded companies exhibiting good corporate governance, so those with a governance rating above 75, and market capitalization above $500 million.
Next we looked for positive trends among balance sheets, to see if any of these stocks have healthy numbers to back up their good corporate practices. We specifically searched among data in accounts receivable, comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables the healthier the company's total revenue.
We screened for stocks seeing faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.
Just two companies remained in our results.

1. Apogee Enterprises, Inc. (NASDAQ:APOG): APOG engages in the design and development of glass products, services, and systems. (Market cap at $838.M, most recent closing price at $29.50.)
2. Gran Tierra Energy, Inc. (NYSE:GTE): GTE engages in the acquisition, exploration, development, and production of oil and gas properties in Colombia, Argentina, Peru, and Brazil. (Market cap at $2.08B, most recent closing price at $7.36.)
Editor's note:  This story by Emily Smykal originally appeared on Kapitall.

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No positions in stocks mentioned.