NCO Group Is All Set to Collect

Looking for a smart countercyclical stock to buck the economy's down trend? Thatcher Thompson of Merrill Lynch thinks he has uncovered one: NCO Group (NCOG), the world's largest bill-collection company, whose stock in this nasty market has leaped from 11 in September to 33. ``Deep-value investors and hedge-fund managers have been buying into NCO, mainly due to its recession-proof appeal,'' says Thompson. At a time when many analysts are scaling back their estimates for companies they follow, Thompson has boosted his numbers for NCO: He has just revised his 2001 earnings estimate from $2.14 to $2.35 a share, and his 2002 figure from $2.50 to $2.82. It's a terrific countercyclical stock with a reasonable p-e ratio of just 13, notes the analyst, whose 12-month price target is 40.

NCO's contingency debt-collection business is ``highly predictable, profitable, and leverageable, and NCO has proved its ability to grow,'' says Thompson. Among its customers are banks, insurers, retailers, and phone companies.