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In taking a look back at the reasons we started to track Rand Worldwide Inc (OTC:RWWI), a software provider of technology solutions to organizations with engineering design and information technology requirements, one of our most important observations was the acceleration of the company’s operating leverage.

In our March 29, 2019 ‘Reasons For Tracking’ (RFT) column (after we included the stock in our model portfolios in February 2019), we showed how, on a year-over-year and quarter-over-quarter basis, RWWI’s Sales, General & Administrative (SG&A) expenses were flattening out while revenue climbed. This is one of the hallmarks of a company that could be set to undergo a big expansion in its earnings per share and potentially a prolonged runup in price.

While it’s certainly been a tough investment environment in 2022, RWWI is now sitting at $20 per share, an all-time high, and 5 times its price at the time of the article. It has basically turned into a quintessential case study for putting an emphasis on operating leverage trends as a potential way to spot a multibagger in the making. Now that growth at a reasonable price (GARP) investing is back in focus, we are going to keep our eye open for these types of setups.

There were other bullish factors at play, such as its recurring revenue model, its position as a prime acquisition target, and very unique relationship with Autodesk, Inc. (NASDAQ:ADSK) for which it was not only a reseller but also a developer of add-ons to extend the utility of the software it sold.

So, this brings us to another stock on which we’d like to begin to put a spotlight based on operating leverage. We’d like to do a similar analysis, more comprehensive analysis like the one we put out on RWWI, but we have yet to look at additional factors that might lead us to write a full RFT.

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