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Thorn Group Limited: a classic stock for a tough economy

Thorn Group Limited (ASX: TGA) reported excellent half year results. Revenues and profits are growing quickly. It could be the classic stock for a tough economy, writes Dean Morel.

Now is a good time to trade up to better quality companies.

Speaking of which,  Thorn Group Limited reported excellent half year results on Tuesday. The market was impressed by the revenue and profit growth and rewarded shareholders with a 7.5 cents or 4.6 per cent gain in a falling market.

Revenue grew at 20% while profit did even better, leaping 30%. The operating leverage in Thorn’s business model continues to propel earnings growth faster than revenue growth.

Thorn’s ability to perform well under challenging market conditions demonstrates the strength of its long-term recurring revenue streams.

The real long term reward for shareholders will be in the resumption of a steadily rising dividend stream. This half’s 13 per cent increase in the dividend is a great start.

I reiterate what I said back in October when I put Thorn on our radar.

Thorn is a well-managed company [still] available at a good discount. It deserves a place on our radar. At the very least Thorn should be compared to your existing holdings.

If you are looking for more stocks on our radar, readers need look no further than The Motley Fool’s Top Stock For 2012Click here now to request this special report, while it’s still free and available.

Motley Fool Investment Analyst Dean Morel does not have an interest in Thorn Group. The Motley Fool has a tough disclosure policy.

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