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Catamaran and Constellation Software Up Big After Earnings

Two of the Canadian market’s somewhat unheralded best performers over the last 5 years or so were padding their returns on Thursday.  Both Catamaran (TSX:CCT,NASDAQ:CTRX) and Constellation Software (TSX:CSU) were up by about 9% in early afternoon trading after both companies dazzled investors with their quarterly releases.

Catamaran reported adjusted EPS of $0.49, which handily beat the consensus estimate of $0.44.  In addition, the company raised its full-year EPS guidance to $1.87-$1.92 vs. the consensus of $1.84.  Tough to go wrong with the ol’ “beat and raise”!

The company also announced the acquisition of Restat, one of the largest privately held pharmacy benefit managers in the U.S.  The cost of the acquisition was $409.5 million cash and it’s expected to add $45 million in EBITDA to the company on an annual basis.

Constellation’s results were similarly strong as the company blew away consensus top and bottom line expectations.  Revenues checked in at $298.2 million vs. the estimates at $269 million and normalized earnings were $2.36 vs. consensus estimates of $1.89.  Stronger than expected organic growth of 6% vs. 0% in the first quarter was one of the drivers behind these market beating results.

The Foolish Bottom Line

With so much of emphasis in the Canadian market placed on resource oriented stocks, it’s easy for great businesses like Catamaran and Constellation to go undiscovered for long periods of time.  It’s only after they’ve increased in value by 5 or 10 times that they begin drawing attention.  Of course, by then, the big money has already been made.

We think we’ve uncovered another Catamaran or Constellation and have made it our small-cap pick for 2013.  Simply click here now to download a copy of this FREE report and find out which Canadian company we think has a shot at similar long-term returns.

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Fool contributor Iain Butler does not own shares in any of the companies mentioned.  The Motley Fool owns shares in Catamaran.   

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