To ALL: Something I found,, thought you all might be interested in,,,,,,
TimSykes'StockPicks
clubs.yahoo.com - #24!
On Friday, I bought into a recent networking/internet IPO called Netscout
(NASDAQ: NTCT). The deal was supposed to be 4 million shares priced
between $14-$16, but they reduced the offering to 3 million shares at
$11-$12. Obviously there was reduced demand, but they did IPO in horrible
market conditions about a week and a half ago. NTCT makes network
management software. Its a high demand area right now. They are a software
company, but their products manage internet inastructure-they manage
bandwidth utilization. NTCT can be compared to CCRD or MUSE most directly,
to which they are undervalued. Lets compare(all in millions except pe
ratio):
1year revenue: CCRD: 52.4, MUSE 48.5, NTCT 67.6
1year net income: CCRD:10.4, MUSE:6.6 NTCT: 10.5
PE ratio: CCRD: 49 MUSE: 122 NTCT: 30
MarketCap: CCRD: 533 MUSE: 906 NTCT: 415
Public Float: CCRD: 5.7 MUSE: 14 NTCT: 3
Granted NTCT's growth isnt as spectaular as MUSE, and even a little less
than CCRD, but 60% revenue growth and 90% EPS growth yr/yr arent too
shabby and do not deserve a pe of 30. CCRD and MUSE were both upgraded and
initiated with buys late last week. NTCT is in an SEC mandated quiet
period following their IPO, which will end in a few weeks. They IPOed at a
rough period and I have noticed that recent IPOS are getting rediscovered
for big moves. See DIGX, GOTO, NTOP, and FFIV for some examples. All
basically faile das internet IPOS that couldnt even move up 50% in their
first week, but now have at least doubled since their lows. I'm not saying
NTCT will defnitely be the next FFIV, moving from the teens to the 80s in
a few weeks, although it could. I see NTCT fairly valued maybe in the 20s
or low 30s, but then again-quality internet plays usually get overvalued
quickly. NTCT can move quickly due to the low float of 3million shares.
Its actually a real company-they have $67 million in sales over the past
year. Companies in the same networking/internet arena like ZOOX, ARBA, and
RBAK have all soared into multi-billion companiies who have virtually no
sales-the prices are held up by expectations of future sales. NTCT isn't
an internet pure play like thos ecomapnies, its also involved in the
high-growth arena of networking. Cisco is their biggest customer
accounting for 51% of sales. If Cisco's sales drop off-NTCT is setup for
an earnings warning-its not good to have one huge customer like that, but
at least Cisco is growing fast too. So there are risks longterm.
Shortterm, who knows what will happen next week with the Fed meeting and
how the market will react. NTCT might not continue its recent run in a bad
market as daytraders sell. But if the market is good, watch out for NTCT.
The most important thing to watch is the volume-it should increase from
the 422,000 traded Friday. I would add NTCT to my longterm account if I
didnt need the cash for college. Right now I'm in NTCT as a short-term
play. It'll probly gapup Monday, but I just don't see any longterm holders
selling at these prices. Maybe a few short-termers will take the gapup
creating a buying oppurtunity. The founders of NTCT are ex-Wang Labs
executives along with Cisco's president. Its just so obvious that NTCT is
undervalued and should be at least $20-$30 in the right market. get more
info at netscout.comnormally I play OTCBBs, but that market
just isnt performing. The rediscovering of IPOS and internet plays that
have gotten hammered recently are hot-I have to go with the trends!
clubs.yahoo.com
Disclaimer: Don't buy because I told you to, do your own research and
always consult a financial advisor |
