Portfolio Diversification: 1 Value Stock in a Unique Industry

Information Services Corp. (TSX:ISC) provides value-added services and could be worth multiples of the company’s current stock price.

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Headquartered in Canada, Information Services (TSX:ISV) is the leading provider of registry and information management services for public data and records. The company delivers value to clients by providing solutions to manage, secure, and administer information. Information Services (ISC) operates three reportable segments, defined by the company’s primary type of service offerings. ISC examines and pursues growth initiatives in Canada and internationally, including other potential strategic acquisitions and opportunities to provide registry and other services in additional jurisdictions.

The company’s registry operations segment delivers registry and information services on behalf of governments and private sector organizations. ISC’s services segment delivers products and services that utilize public records and data to provide value to customers in the financial and legal sectors. Also, the company’s technology solutions segment provides the development, delivery, and support of registry technology solutions.

Long-term agreements

Through the registry operations segment, ISC provides registry and information services on behalf of the province of Saskatchewan under a 20-year master service agreement (MSA). It is in effect until 2033 and is the exclusive, full-service solution provider of the Saskatchewan land registry, personal property registry, corporate registry, the common business identifier program, and the business registration program.

For services in this segment, competitors include infrastructure funds and private equity firms as well as information services companies, registry software providers and other such information-based companies that develop and provide software platforms to manage registry and related information services.

Reliable land ownership information

Generally, the company’s land titles registry division issues titles to land and registers transactions affecting titles, including changes of ownership and the registration of interests in land, in the province of Saskatchewan. The land titles registry provides access to timely and reliable land ownership information to support new and used home sales, land and home development transfers, and other value-added transactions.

Primary users include law firms, financial institutions, developers, and resource companies. Revenue for the land titles registry is earned through registration and search and maintenance fees.

Diverse revenue streams

Registration fees are either a flat fee or value-based, calculated as a percentage of the value of the land or property being registered. The company typically charge a flat fee per transaction for search and maintenance transactions. However, in certain instances, it charged a negotiated fee for a customized search or maintenance transaction, such as certain mineral certification or bulk data requests.

Land survey plans define the geographic boundaries of land parcels throughout Saskatchewan. ISC’s customers include surveyors, developers, resource companies, and other businesses that require mapping systems and survey plans to support development plans. Revenue related to all services is earned as a flat fee per transaction.

Also, the company’s personal property registry division enables lenders as well as buyers of personal property, such as motor vehicles, to search for information such as security interests registered against an individual, business or personal property used as collateral. Buyers and lenders search the registry to verify there are no outstanding notices of third-party interests in personal property.

Overall, ISC provides value-added services and could be worth multiples of the company’s current stock price.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.

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