AKAM and The Gang of Four – AAPL, CTXS, FFIV & FRK

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Apr 25 2007
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Akamai Technologies Inc. (Nasdaq: AKAM, stock) reports earnings for the fiscal fourth quarter today, Wednesday Apr-25-2007, after market close. Akamai provides services for accelerating and improving the delivery of content and applications over the Internet. Akamai offers services and solutions for digital media distribution and storage, content and application delivery, application performance services, on demand managed services and Website intelligence.
After Waters Corporation (NYSE: WAT, stock), Brinker International Inc. (NYSE: EAT, stock) and Coach Inc. (NYSE: COH, stock) disappointed me, I hope (hey, sometime I can only predict whether it’ll beats earning but not the bottom line etc) my luck (who said you don’t need lucks to maximize your profit?) will change for the better. Anyhow, as an investor, you should still do your research on stocks’ fundamental and technical analysis.

Rating Indicators for AKAM:
  • Wall Street consensus : 0.28
  • StockScouter rating : 9 / 10
  • Whisper Number for this stock : 0.31
  • Schaeffer rating for this stock : 6 / 10
  • Power Rating : 5 / 10
  • Insider Trading (last 52 weeks) : ($38.65 M)
  • Zacks Analysts Rating: Hold
  • Option Trading: June 2007 55.00 Call
  • Implied Volatility (IV) for June 2007 $55.00 Strike : 40.91%

Sales, Income & Growth – For the past 12-months, Akamai registered $428.67 Million in sales versus the industry’s $4.32 Billion. Income amounted to $57.40 Million against the industry’s $475.64 Million. While Akamai’s 12-months sales growth is at 51.4%, the income growth is in negative 82.50% (the same industry sector sales growth is at 25.80% and income growth of 119.30%).

Profitability & Financial Health – For the past 12-months, net profit margin is in the region of 13.4%. Akamai has a debt/equity ratio of 0.21 compare to industry’s ratio of 0.50.

Stock Resistance & Support Level – The resistance is at 59.69 (52-week high)while the first level support is at 52.44 (50-day moving average)

Risks – The ratio of AKAM’s price-to-earnings multiple (160.20) to its five-year growth rate is above the average of all stocks.

Cramer believes both Apple Inc.’s (Nasdaq: AAPL, stock) and Akamai will be worth getting into ahead of their quarters – Apple as a play on its new iPhone and Akamai as a way to play streaming video.

Akamai says that traffic generated by its SaaS (Software-as-a-service model) customers increased fivefold in the year ending January 2007. Let’s face the fact, SaaS can’t work without a secure and reliable Web infrastructure to undergird it. SaaS up and coming Google (Nasdaq: GOOG, stock) could unleash a market that researcher Gartner says will triple to $19.3 billion by 2011 – which would put Akamai in the center of attention.

Furthermore demand for software-as-a-service is increasing as small and large businesses alike have become more and more frustrated by the lengthy deployment cycles and the costly maintenance of traditional software. By using the Akamai Web Application Acceleration solution for secure and reliable application acceleration, SaaS providers can confidently approach any enterprise regardless of their size and geographic distribution while reducing the operating costs associated with IT.

“We expect that Google’s deal for Doubleclick will benefit public assets such as aQuantive, ValueClick, and possibly even Akamai, as there is a scarcity of high-quality assets combined with an aggressively consolidating sector,” Scott Devitt, an analyst with Stifel Nicolaus, said in a research note.

Other Stocks Under My Radar (for today’s after market closing target stocks):

  1. Apple Inc.’s (Nasdaq: AAPL, stock)option trading on APPL JUL 95 Call. Did you notices how the May’s Call for 95.00, 100.00 and 105.00 being bid-up to 5-figures? What do you think that signals are? Investors are just bullish.
  2. Citrix System Inc (Nasdaq: CTXS, stock)option trading on CTXS JUN 35 Call. This stock’s option has been bid-up as well with a ratio of almost 2:1.
  3. F5 Networks, Inc. (Nasdaq: FFIV, stock)option trading on FFIV JUN 65 Put. I’m bearish on this stock. It’s PUT has been bid-up especially JUN 65 Put. So, join the crowds and make money.
  4. Florida Rock Industries, Inc. (NYSE: FRK) – can you believe I still keep this baby from my positions of the previous quarter pre-announcement? The volume is rather low for this stock.

There’re just too many potential and great companies going to announce their earning announcement this week. I just can’t cover all of them, so I’ll just choose based on stocks which I made money from it before – simply because I’m comfortable with it’s fundamental.

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