OUTLINE:
*Each target price is (1) computed using CGFS' proprietary valuation and simulation approach and (2) adjusted within 3 standard errors of the estimate. Assumption and computation details are inserted at the end of each write-up.
This Week's Picks:
- Our Weekly Stock Picks*
- Macro Environment
- The Bond Report, What's next, & Key Earnings
*Each target price is (1) computed using CGFS' proprietary valuation and simulation approach and (2) adjusted within 3 standard errors of the estimate. Assumption and computation details are inserted at the end of each write-up.
This Week's Picks:
Cyber terrorism was one of the main topic and issue addressed by both Hilary and Trump during their campaign. The candidates said during national debates that counter cyber terrorism and espionage was one of their priorities. This attention benefited most of the industry with stock prices gaining ground. I believe that FTNT is a performing company within booming industry. Therefore I see a lot of upside potential for Fortinet. The company might currently be slightly underpriced, but the upside is about what the company is doing now, and the fact that FTNT is first in line to benefit from a growing industry.
Cirrus Logic, Inc. was incorporated in California in 1994, and became a public company in 1989. They were reincorporated in 1999 for the State of Delaware. Their primary engineering, sales and marketing, and administrative functions are located in Austin, Texas. Cirrus also has locations in the United States, U.K., Sweden, Spain, Australia, and the People’s Republic of China, Hong Kong, South Korea, Japan, Singapore, and Taiwan. Cirrus targets growing markets where they can leverage expertise and digital signal processing to solve complex problems. Cirrus focuses on building strong relationships with their customers to develop highly differentiated components. Often, Cirrus develops a design that can be expanded into additional products. This strategy gives Cirrus the opportunity to increase content over time with customers with new features, integration of other system components, and new components. There are many factors that would lead to substantial growth. As of the third quarter, Apple represented 66% of Cirrus’ revenue, which pushed past a billion dollars for the first time for the year 2016. Although Apple is a reliable customer, more diversification is needed. In addition, new products and new technologies could spur growth in the semiconductor industry. Voice biometrics is a growing market for many different sectors, and it allows people to interact with their devices via voice commands. Biometrics is certainly a growing market, but active noise cancellation (ANC) in headphones will be a more immediate catalyst. Samsung, a customer of Cirrus, anticipates this technology will cut out ambient noise by 20 decibels, which provides a competitive edge. These factors, including the earnings report expected to come out at the end of April, will significantly influence the value of Cirrus Logic, Inc.
Micron (MU) is ready to release its Q2 2017 earnings report on March 23rd. After a strong Q1, forecasters expect another successful quarter. Micron has benefited from favorable prices, and it shows through their recent increase in margins and earnings. DRAM and NAND prices have significantly improved because of an undersupply of the products in the market. When prices were favorable MU traded in the 30s. With prices starting to go back to that point, MU seems poised to head back to that range. The industry itself has been growing at a consistent rate and the future is bright for semiconductors. With new technology hitting the market every day, Micron will be able to capitalize on these new breakthroughs for years to come.
Tech Data Corporation is the largest and most efficiently run distributor in the information technology industry. Tech Data had a solid 4th quarter earnings performance by drastically decreasing its cash conversion cycle to 15 days and generating $657 million in operating cash flow for the fiscal year. The acquisition of Avnet's Technology Solutions Business will provide Tech Data with increased capabilities and expanded reach across technologies and geographies, especially in Asia-Pacific. Tech Data is able to pivot in a disruptive technology industry from unsuccessful to successful products. The acquisition also gives Tech Data an advantage into third platform products compared to its competitors. Tech Data has low profitability margins compared to its competitors. Tech Data is underpriced right now and has strong fundamentals for its stock price to continue increasing.
Network-1 Technologies is a strong microcap company who has no debt, strong balance sheet, consistent quarterly revenues for the past six years. Currently the company owns 28 patents which includes four main assets with high revenue potential such as Remote Power Patent, Mirror Worlds Patten, Cox patent and QoS patent. Major tech companies such as Apple, Google, Cisco and Microsoft to name a few have reached licensing agreements for NTIP patents. The company has a history of being in court for validation on their patents in which the courts have continued to rule on their side, thus proving there is value to be found from these patents that are wanted by tech industry giants as stated before. To be exact NTIP has initiated patent litigation for infringement for its Remote Power Patent with 16 data networking equipment manufacturers such as Dell, Hewlett Packard Company, Huawei Technologies, Motorola Solutions, Samsung Electronics and Sony electronics just to name a few but as recently reached a settlement agreement with Apple and Microsoft for their Mirror Worlds Patent. As of today, 12 out of the 16 companies have reached settlement and licensing agreements for NTIP Remote Power Patent.