My Own Analyst

CSCO and NTAP

CSCO slammed on weak guidance.  Support at 21 area, not too far from where it traded last night and very early this morning.

NTAP had a solid quarter - small sales miss mainly due to government shutdown but excellent margins.  I lowered my target very slightly to 52.50 and think a 39 entry would be good.  I see good technical support there too (37-38 even better).

Weekend Update - Fed Green Light Edition

I am keeping it short on the intro.  I shared a chart on Marketfy by email that you should have seen.  If not, here it is:

This chart is a little cautious to me, but nothing that makes me want to get too negative.  I wouldn't be surprised to see some back-filling.  The upside is becoming limited, and I do expect some selling in Q4.  After a lot of frustration waiting for the big pullback that finally hit in June, I am in no hurry to fade the market for now.

Looking at stocks on the watchlist ( Download Watchlist092013 ), the only stock to move by 10% or more was OUTR, which was crushed following a big pre-announcement.  It's -1.93 on the price momentum indicator.  CAG is -2.68.  Others between -1 and -2 include ISRG, TITN, MW, FL, ANV, NEM, INT and SWI.  On the "prospects", CTRX, AEO, BJRI and URBN look interesting and moderately oversold.

72 stocks closed above the 10dma, which is no out of balance given the rallying market.  The black 1s still number 14, which is too high.

As far as stocks offering 35% or more, it's the same list:  ANV, URI and OUTR.  I actually raised my target on URI slightly and really like it.  I have been hoping to see some strength out of TITN to trade - not happening.  On OUTR, I cut the target A LOT. It's now 12PE, and this is 65.  My confidence level isn't that great, so I will watch it now (42.50-45 looks like the buy zone).  I made a series of small target adjustments across my watchlist as well.

Looking at the holdings in the models ( Download Positionwatch092013 ), again, I made some marginal changes in targets.  We have PBI pretty overbought, and, while I like the story long-term, I am removing it from Top 20.

IIVI Buys Assets of OCLR

It's a somewhat complex deal, but IIVI is buying the majority of assets from OCLR.  They paid $115mm for one set and $5mm for an option to buy another.  I am not sure why they aren't just buying the whole company.  OCLR has been withering away.  The deal gets them into adjacent products, one of which is nice - fiber lasers (a gap in their portfolio).  It is slightly dilutive this year.  My guess is that they got a good price - OCLR was teetering on bankruptcy and needed a bailout.

SWI CFO Leaves

This is usually not good...  Split the job up and now two are doing it after promotions.  The CEO is a financial type (was Red Hat CFO).  Not too worried.  Actually wasn't a fan.  Still, stock won't react well most likely...

I Am Warming Up to This One

IIVI - just increased it in Top 20 after suffering for a while.  I like that they are exiting tellurium and selenium - too volatile.  They also stepped up an investment that is profitable.  This stock tracks FLIR (customer and competitor) as well as optical companies like FNSR.  FNSR exploded to the upside.  This chart doesn't reflect it:

 

SUPER Micro

SMCI had a great end to Fiscal 2013, reporting sales of $322mm and EPS of .26.  This was 5.6% higher on sales than the consensus and 24% higher on EPS.  Guidance was in line with the consensus for Q1.  I expect the stock to rally quite sharply - it's very cheap and this is the quarter we have been awaiting.  My target is 17 based on 13 PE a year from now, but I expect that it could go to 18 or higher based on a higher PE.  52-week high is 13.75 - seems possible...

SWI

I listened to the entire 90 minute call, 45 minutes of prepared remarks and 45 minutes of Q&A.  I am somewhat surprised to see how much the stock has declined (below 37), but this is the second straight quarter of issues arising.  The full year EPS (after a beat this quarter) dropped from consensus of 1.55 to 1.51-1.54.  This clearly isn't worth 20%, but there's more to the story.  Licenses are the lifeblood, and the growth has slowed a lot.  The PE assumption I use here was high - like 30X.  If one decides it should be 25X, this knocks off about 17% alone.  I think that loss of confidence is the issue, but, and I could be wrong, it seems like this is very premature.  Maybe if I rode this all the way down from 60 my emotions would be different, but I really like this company's prospects.  So, hopefully this after-hours trashing is overdone.  I see 40 area as making more sense.

SWI

I failed miserably on trying to trade it today - the reaction was obviously much worse than I expected.  Trying to call the exact bottom is hard - I think ULTA, for instance, went a little lower than I expected yet rallied like a mofo subsequently.  I like this story a lot and will likely be adding it to Top 20 tomorrow.

SWI

They did host a call - I listened to the replay.  The deal sounds really smart to me, but it will hit EPS in 2013 by about 11 cents ($1.64 was the prior consensus).  It will cost a little in 2014 too.  If this hurts the stock, I would be a buyer.  I had called this out as "treasure", and companies that are willing to dilute to buy rather than build smartly, as I think is the case here, shouldn't be penalized.  If the deal is worth what they paid ($120mm is 5-6X sales, which seems appropriate for a cloud-based company that fits in very well), then the price should stay the same:  Core company stays same, cash down, new company worth the amount of cash reduction.  If they overpaid by 50% ($60mm), then the price would drop by less than $1.  I don't think that they overpaid.  Looking at the chart, 46 looks like the buy spot.  My target remains 60 a year out.

SMCI

No idea why the high-volume sell-off but will update...