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Friday,
May 8, 2009
(Cont'd from
above)...
Jim (cont'd):
Starent Networks,
Corp. (STAR).
That's right,
Starent Networks.
Of the techs, this
one has been almost
universally called
in on... I always
say wait for a
pullback...
We like this
backbone of the
wireless industry
with 30% growth.
It's really only one
of a handful of
companies with that
kind of growth in
the country... but,
as we have said time
and again on the
Lightning Round...
we need that
pullback... we've
been desperate for a
pullback to
recommend it and,
because the tech
market and
the Nasdaq
was so weak this
week, we've finally
got one, as the
stock dropped a
couple of bucks to
$18 and change...
Okay, I know, I
know... That's
hardly a pullback...
but think of it like
this... Do you know
that Starent hit a
52-week high this
week?... A 52-week
high... How many
stocks do you have
that are even in a
striking distance of
their 52-week
highs?... How about
within 50% of
one?... That's more
like it, right?...
This is about as
deep a pullback as
you could expect for
a company that
supplies hardware
and software that
manages data content
for almost the
entire wireless
industry... which is
still the
fastest-growing
portion of
technology.
On April 23rd, STAR
put up a stellar
quarter, with
earnings of 22
cents, versus a
consensus of 16
cents. It was the
biggest percentage
earnings beat of
this reporting
period... of the
many stocks that I
follow. It earned
that much because of
the hammerlock it
has on what's known
as CDMA network
technology... If you
have Verizon, you
know exactly what
I'm talking about...
75-80% of the market
share... In fact,
this is a huge
customer... Verizon
just does a ton of
business with
them...
You know what?... I
don't even care. I
think what's
exciting about STAR
is that it's about
to move into
China... to China,
the most important
market in the
world... and it's
testing for China
Unicom and China
Mobile...
Some would say this
stock isn't all that
speculative, given
that it has $5 per
share in cash, and
no debt. I say, we
always have to worry
about a company that
sells at an inflated
26 times earnings...
literally twice of
what most stocks
sell at... But,
remember, we don't
really care about
that high
multiple... we care
about how it stacks
up versus the growth
rate and, in this
case, we are paying
less than 1x STAR's
growth rate. And we
say that you are not
going to get that
kind of growth that
cheap very often...
in any market, not
just this one...
So, STAR completes
our tech spec basket
of the week...
Tekelec (TKLC),
Brocade Communications (BRCD),
Cadence Design
Systems Inc. (CDNS),
and ON
Semiconductor Corp.
(ONNN)
What do we do with
it?...
Just divide up the
amount you have to
invest, and put some
equal amounts in
each. As I say in
Real Money...
you will probably
have a loser, a
couple that don't do
that much, one that
goes up nicely and,
finally one that
makes a fortune...
probably equal to
all the money that
you're going to put
in...
If you don't know
how this kind of
field bet works,
check out
the book.
I tell you exactly
how to play it...
Here's the bottom
line...
▼ ▼
▼ ▼
▼
 The
Bottom Line!:
If you are a
speculator, you got
your wish this
week... A down tech
week, as the hottest
group took a
backseat to oil and
gas and banks... I
believe this group
is going to come
roaring back... all
aboard!... And you
just got your Game
Plan on how to play
it.
[verbatim recap]
[end of segment]
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