20 Technology Stocks in <10 Minutes for Friday Open

26/05/2011

I have been off the stock picking subject matter for a few weeks as there has been a lot to digest in terms of technology.  For an early Friday post before a long weekend in the US, I review a few of the stocks I made calls on since the blog restarted and added a few more for twenty.

JNPR: The analyst at Auriga downgrade JNPR a couple of days ago based on concerns about Openflow affecting adoption of Juniper’s QFabric as well as pricing pressure in routing and switching markets.  I think the product cycle is still positive for JNPR, but there is a theta calculation to this cycle.  I am not concerned about Openflow affecting adoption of QFabric as I think failing to technically explain QFabric to the world has more to do with the confusion around the architecture than the headwind of Openflow.  The stock has definitely cooled in the past few weeks and I am neutral.  I would wait to buy around $33-34 if you want to be long.

ADTN: Product cycle positive.  US capex favorable, but the stock seems topped out around the mid $41 level.  Neutral.

CSCO: I have written a lot about CSCO.  Chart is right on track with the prediction after earnings.  I still think you need to wait till post August earnings before it is a buy.  Product cycles are still negative.  Neutral.

RIMM: Product cycles are negative, but the new BB with the Snapdragon processor is getting positive reviews.  Stock has bottomed out in my opinion, but it is hard to see a positive catalyst without better clarity on earnings.  Neutral.

NOK: Another challenged mobile device maker and I do not want to hear about how some new Windows phone will save 2011 and produce better earnings.  Product cycles are negative.  Stock is bottoming out at the $8 level.  Hard to see a positive catalyst for 2011 unless a large group of investors want to have a kumbayah moment.  Neutral.

AAPL: Product cycles are positive, but the stock looks like it is topping out.  I would be reducing the long position at this level.  Sell.  It can be traded around the WDC an iPhone 5 launch.

GOOG: I think there is a lot of positive product cycle momentum with GOOG, but I will be the first to admit that the weekly and daily charts broke all manner of technical indicators and that makes it very concerning.  Sometimes you have to accept what the market is telling you.  I would look for new entry point and it is probably below or around the $500 mark.  Long, but looking for lower entry point.

FNSR: Product cycle is still positive, although ROADM momentum has slowed.  Price level back to trend line from 2009 market bottom.  Resistance starts at $25-30, but it is a buy here as CAPEX trends should be favorable into YE.  Long.

APKT: Nothing has changed despite market none-sense chatter contrary to my prior post.  Long.

FFIV: F5 presents a very interesting chart.  I would be long the stock through June.  July is another matter, but for now the technical indicators and stock action imply the bulls what to rally this stock into the next print.  Owning it into the next print is another matter for later.  Long.

RVBD: I put RVBD right after FFIV because these stocks look like twins.  The product cycle is still positive for RVBD, but the recent stock action looks like the bulls want to rally it into July earnings.  As with FFIV, I think earnings is another matter.  For now, if I wanted to be involved I would be long.

SCMR: Not sure much has changed with recent earnings since the last post.  It has a high level of risk/reward.  If I could buy it at $16-18, no problem; at $22+ not so sure.  Neutral.

QCOM: Positive product cycles, but the stock seems to be getting tired after the last run.  I am okay buying it at this level.  Long.

HPQ: Every other day it seems the WSJ has a negative article on HPQ.  After the Hurd drama the WSJ should send a check to HPQ for providing so much content over the past year.  All we need now is a Baron’s piece that says the Baron’s Trader is positive on HPQ and Cramer rant to put a bow on it.  HPQ finally bounced off the lower resistance level from 2009 a few days ago.  $35 and change seems to be the bottom point if you want to be a buyer.  More reward to the upside than the down side, but it is likely the stock does nothing here for a few months.  Long if anything, cover the short.

DELL: Stock just made a triple top off the 2009 low after breaking the down channel from the 2009 peak.  It is not often that stocks have such big swings.  Despite all the moves, hard to declare the company is in a positive product cycle in the age of tablets and blades.  Neutral with a bias lower at this price level.  I would not own this into August earnings.

JDSU: A lot of overhead resistance at the $20 level.  As with FNSR I like the stock to perform better in the 2H, but it might be easier to buy this stock late in August and September for a run into early 2012.  Neutral with a bias to the upside.

INTC: More of an industrial company than a technology company, the stock did something on a weekly chart it had not done in 9 years.  The product cycles are positive and it finally broke a very long downward channel during which there were four peaks and three new lows.  Long.

MSFT: Despite all the recent headlines, the stock is center in a ten year weekly up channel.  The daily chart looks disappointing, but are you really going to own this stock in a world of tablets and MACs for growth?  Stock is a holding bucket.  Neutral.

BRCD: Defiantly in a upward momentum channel and at the current rate will regain the October 2009 high sometime in mid-2012.  Long with a low interest level.

S: On a daily chart, Sprint looks like it is breaking out in a new bullish channel.  On a 9 year weekly chart the move requires a microscope to detect.  Coming off the 2009 low, $6 has been a tough barrier for the stock to break.  Momentum is better and it looks like $7 is in the future before $5, but I think there are better risk/reward equities.

LVLT: When had my old blog in 2007, I once wrote a negative post on LVLT in February 2007 perfectly timing the $6.80 high.  The stock has not had a whiff of this level since.  I received fantastic hate mail as well as bullish emails so far fetched I wondered how detached from reality the authors were.  For entertainment purposes before the weekend I included an example below from February 2007.  As for the stock today, it does look bullish for the first time in a long time, but I would not be involved in this company when you can buy AAPL, FFIV, APKT or GOOG which are companies that make a lot of money and have a really good business.

“CroweBonics is Silicon Economics applied to our communications business. It’s a fun reference to the phenomenon which Crowe has opined so often. It’s nothing more unless we get into the more complex Mini Max Model. I have never used their model due to the simplicity of my mindset when looking to apply investment thesis-when the company started, and some believe, will factually kick in with the tsunami of video traffic hitting all “networks.”  It’s the price elasticity of demand concept. We are comfortable with 3:1 ratios where bit demand is growing three times price compression.  If demand is growing at 75 percent and prices are dropping at 25 percent; we have a 32 percent GROWTH rate.  The hangover in telecom killed the formula, as you know. Even traffic growth doubling each year would be revenue neutral to the top line while fifty percent year over year price degradation might occur.  At last check, IP & Data traffic was growing at 40 percent according to my research. I believe we have begun and are heading into the HYPER GROWTH portion of the S curve…So William, we have a “healthy business” it appears again (CroweBonics), and a best of breed management team!”

/wrk

* It is all about the network stupid, because it is all about compute. *

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