24/7 Wall St. » ARRS

Deep Value Technology Stocks for the Second Half of 2011 (ATVI, AMKR, ARRS, BRCD, IDTI, WFR, PMCS, SNDK, WDC)

Administrator — Fri, 01 Jul 2011 10:31:26 +0000

Using the term “value stocks” in the same sentence as “I.T.” and “technology” can be a dangerous game. Still, many investors, particularly of the private equity acquiring type, do use basic value calculations in looking for a core business to acquire. We generally look at Technology “value stocks” as being companies that trade with low price-to-book ratios, those that can still have positive earnings ahead and those with low expected ratios for price-to-earnings. There are many more factors to consider in each of these and we have tried to outline the proper pros and cons in each.

The current list of 24/7 Wall St.’s Technology Value List for the Rest of 2011 is in alphabetical order: Activision Blizzard, Inc. (NASDAQ: ATVI); Amkor Technology, Inc. (NASDAQ: AMKR); Arris Group Inc. (NASDAQ: ARRS); Brocade Communications Systems, Inc. (NASDAQ: BRCD); Integrated Device Technology, Inc. (NASDAQ: IDTI); MEMC Electronic Materials Inc. (NYSE: WFR); PMC-Sierra Inc. (NASDAQ PMCS); SanDisk Corp. (NASDAQ: SNDK); and Western Digital Corporation (NYSE: WDC).

Generally speaking, technology value is under 2-times book value under is now under 12.5-times expected earnings. Except where otherwise noted, the source for all performance and financial data is Finviz.com. When you have Cisco, Microsoft, and Intel all trading at dirt-cheap earnings multiples, many investors may think that value and tech are immaterial. Another issue is that private equity firms generally look at other less capital-intensive businesses with lower R&D expenses.

Only two of these deep value tech picks are repeated from our “Deep Tech Value List from Late 2010″ and the mix there will show some serious wins and some which remain in the value-trap category. The remaining two value picks and others from that list are higher than late in 2010, but one of those prior value picks is Kulicke & Soffa Industries Inc. (NASDAQ: KLIC) and it has nearly doubled since then despite facing woes around the time.

Activision Blizzard, Inc. (NASDAQ: ATVI) boasts a price to book value ratio of 1.28 to 1 placing it in the top-tier of these companies. The company’s $13 billion market cap ranks it first among this group of technology companies. Its 12.5 forward earnings multiple is makes it richest among these nine companies. In a recent trading session Activision’s shares closed at $11.38. Its 52-week price range is $10.16 to $12.46.

Activision is no buyout candidate by our take. The company has an incredible console and PC game line-up and it clearly wins in the MMORPG genre. Perhaps its biggest competition and threat today is “freemium” games that are sold to iPhone and iPad users or which are social-networking oriented games. It is even possible that Zynga is going to be valued more than Activision’s $13+ billion market capitalization. Activision has a consensus Thomson Reuters analyst price target above $14.00, a price not seen since before the tech sector and economy went into the tank of the recession. If Zynga’s market cap is magically going to be $15 to $20 billion with about one-quarter of the revenues, the true largest gaming stock is going to look like deep value.

Amkor Technology, Inc. (NASDAQ: AMKR) is in the unloved and somewhat boring space of semiconductor packaging and test services. As with many value stocks, it is probably cheap for a reason. Its shares are trading at a price to book value of 1.56 to 1 a middle-of-the-pack number among these companies. The company’s $1.2 billion market cap places it among the smallest of these companies. Its forward PE multiple at less than 6 is virtually the “leanest” and best among these companies. Amkor recently closed at $6.10. Its 52-week trading range is $5.05 to $8.49.

What is interesting is that the Thomson Reuters consensus price is $9.50, implying upside of more than 50%. It has effectively been trying to refinance its debt at lower rates, which will make its debt level less burdensome ahead. Fortunately, this company carries almost no value in goodwill and intangibles. Amkor was at point in 2007 worth some $16.00 per share and the company might be able use its interest savings for dividend payments. There has been consolidation in its space for bolt-on acquisitions.

Arris Group Inc. (NASDAQ: ARRS) is an equipment-maker for the broadband communications sector, and that means it sits in a peer group that is subject to good hits and bad misses. The company boasts a price to book ratio of about 1.41, placing it in the top-tier of these companies. The company’s $1.4 billion market cap places it in the lower tier of these companies. Its forward earnings multiple in excess of about 12 ranks it among the richer companies on this list, but still cheap against many peers. In a recent trading session Arris Group’s shares closed at $11.27. ts 52-week trading range is $8.16 to $14.49.

Arris offers no real yield as a safety net for income-oriented value investors. The company has very manageable debt and more than $620 million in cash. Arris is in the middle of a long-term range in the stock and offers no real dividend. There is value when it comes to traditional screens here, but historically it seems to be somewhere around Par for investors.

Brocade Communications Systems, Inc. (NASDAQ: BRCD) is one that is in the ripe spot for consolidation in networking and storage. It boast a price to book ratio of under 1.4 and many investors and some analysts consider this one to be bait for consolidation. Its market cap is about $3 billion. The company’s forward earnings multiple in excess of 11.5 ranks it among the richer companies on this list. Brocade shares posted a closing price of $6.25 in a recent session. The 52-week price range is $4.64 to $7.30.

One analyst recently laid out the case that Brocade should be acquired by Dell. Thomson Reuters used to have a consensus price target much higher and this one was worth $10.00 back in 2007. Arguably it is the poor-man’s Cisco, and that is keeping it from being a high premium stock right now.

Filed under: Private Equity, Semiconductor, Technology Companies, Telecom, Value Investing, Video Games Tagged: AMKR, ARRS, ATVI, BRCD, IDTI, KLIC, PMCS, SNDK, WDC, WFR

Top Analyst Upgrades and Downgrades (ARO, ARRS, BIOD, XCO, INCY, LEAP, MPEL, PCS, SANM, S, TC, VZ)

Administrator — Tue, 02 Nov 2010 12:05:34 +0000

These are some of this Tuesday’s key analyst upgrades, downgrades, and initiations seen in Wall Street research calls.

Aeropostale, Inc. (NYSE: ARO) Cut to Underweight at KeyBanc.
Arris Group Inc. (NASDAQ: ARRS) Started as Hold at Needham.
Biodel, Inc. (NASDAQ: BIOD) Cut to Neutral at JPMorgan; Cut to Neutral at Ledanberg Thalmann.
EXCO Resources Inc. (NYSE: XCO) Cut to Market Perform at BMO.
Incyte Corp. (NASDAQ: INCY) Cut to Market Perform at Leerink Swann.
Leap Wireless International Inc. (NASDAQ: LEAP) Started as Market Perform at William Blair.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Raised to Buy at CLSA (Asia).
MetroPCS Communications, Inc. (NYSE: PCS) Started as Market Perform at William Blair.
Sanmina-SCI Corp. (NASDAQ: SANM) Cut to Hold at Collins Stewart.
Sprint Nextel (NYSE: S) Started as Underperform at William Blair.
Thompson Creek Metals Company Inc. (NYSE: TC) Raised to Outperform at RBC.
Verizon Communications (NYSE: VZ) Started as Market Perform at William Blair.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: ARO, ARRS, BIOD, INCY, LEAP, MPEL, PCS, S, SANM, TC, VZ, XCO

Select Tech Stocks Hitting 52-Week Lows (ARRS, ARTG, ATMI, CSC, FORM, TINY, HPQ, LOCM, PLXS, POWI, PGI)

Administrator — Mon, 23 Aug 2010 18:11:43 +0000

Investors are opting out of many smaller and larger technology names in case this slowing becomes a true double-dip recession. Despite the selling that has already been seen and despite what had been a positive trade tape, we are seeing many smaller and larger technology names putting in new 52-week lows today. The ongoing reports of slower demand, sluggish sales, elevated inventories, cautious or weak economic data, and more have brought on an exit away from more speculative growth names in favor of a defensive investment climate. We are tracking Arris Group Inc. (NASDAQ: ARRS), Art Technology Group, Inc. (NASDAQ: ARTG), ATMI Inc. (NASDAQ: ATMI), Computer Sciences Corporation (NYSE: CSC), FormFactor, Inc. (NASDAQ: FORM), Harris & Harris Group, Inc. (NASDAQ: TINY), Hewlett-Packard Company (NYSE: HPQ), Local.Com Corporation (NASDAQ: LOCM), Plexus Corp. (NASDAQ: PLXS), Power Integrations, Inc. (NASDAQ: POWI), and Premiere Global Services, Inc. (NYSE: PGI) as these have all either touched their 52-week lows or have put in new 52-week lows this Monday. We have outlined each with added color, trading data, and any relevant news as to what the prospects are.

Arris Group Inc. (NASDAQ: ARRS) still has a $1 billion market cap, but this name has been brutally punished over the last month from $12.00 to under $8.50 this morning. The $8.41 low of the trading day barely broke under the 52-week low as the range had been $8.42 to $13.75. Avondale cut its rating on Friday a few weeks after it missed earnings and guided lower for quarter ahead. As it makes equipment for the broadband communications sector, investors have other companies with more solid predictability to choose from.

Art Technology Group, Inc. (NASDAQ: ARTG) has nothing to do with art but does offer a range of e-commerce software solutions and it is now very close to being worth under $500 million in market cap. If that occurs, some holders may have to liquidate shares or lighten up on shares and some others may no longer be able to keep the company in their investable universe. With shares hitting $3.18, that touches the same 52-week low as the range is $3.18 to $4.88.

ATMI Inc. (NASDAQ: ATMI) is in the high-performance materials business to developers in chips, flat-panel makers, and life science sectors. Despite having beat earnings a month ago, the low of $12.77 today went under the prior 52-week trading range was $12.88 to $22.05. Despite estimates having been trimmed, growth is still currently projected for 2010 and 2011.

Computer Sciences Corporation (NYSE: CSC) was in a broader 52-week grouping on Friday, so this IT and business processing outsourcing giant is a repeat offender on the 52-week low list. Friday wasn’t its first 52-week low in a while either.

FormFactor, Inc. (NASDAQ: FORM) is into semiconductor wafer probe card products and its $422 million market cap is not insulating it from the recent slowing of the chip and PC cycle. The $8.34 trading range this morning broke under the prior 52-week range of $8.45 to $26.08. This one loses money now and is expected to keep losing money from operations.

Harris & Harris Group, Inc. (NASDAQ: TINY) is one without any fresh news, but as things are becoming more cautious in general investors are not really wanting to endorse a venture capital or incubation company involved in nanotechnology and smaller technology despite the upside potentiality that could exist down the road. With a low of $3.73 today, its prior 52-week range was $3.80 to $6.75. The company recently gave a net asset value for itself of $4.51, so this is now at a 17% discount to its NAV if you care about such metrics. It is also now under the 4.25 million shares secondary offering of late 2009 at $4.75 per share. Unfortunately, it was also unsure on the IPO market and said it did not need as large of a Silicon Valley presence earlier this year.

Hewlett-Packard Company (NYSE: HPQ) hit $38.61 and is a repeat offender on the 52-week low list after breaking under the old range of $39.33 to $54.75. Its $91 billion market cap should have the even higher priced 3PAR deal over Dell be nothing more than a line-item. Unfortunately, investors are still treating the Mark Hurd fiasco as an excuse to keep selling at a time when many of the general spending trends are weakening.

Local.Com Corporation (NASDAQ: LOCM) is generally too small to note, however it is one of the companies that if it ever gets cheap enough is one we think could be acquired. It is also more of an internet play than a pure technology play. With more of the larger players focusing on more and more local search, Local.com finds itself in an attractive position even if ad rates may not be what they were before. Its low of $3.56 this morning went under the old 52-week trading range of $3.61 to $8.85.

Plexus Corp. (NASDAQ: PLXS) is a contract manufacturer for OEMs and other technology companies. The company recently lost a little over a week of production from a fire at a Romanian facility this month. The drop to $30.00 this morning has seen some recovery but the shares are still well under the $23.80 to $39.66 prior range.

Power Integrations, Inc. (NASDAQ: POWI) makes high-voltage and analog integrated circuits for energy-efficient power conversion. Even if the economy slows further, with an $820 million market cap it always could fall into that category of companies still attractive to a larger buyer. Growth is still expected here in 2010 and 2011 in both revenues and earnings, and it is now close to an at-market multiple of earnings. The low of $29.36 took out the lows of its prior range of $29.79 to $46.30 over the last year.

Premiere Global Services, Inc. (NYSE: PGI) is another surprise to see hitting 52-week lows. The communications player is still often classified wrongly by many investors despite its changes in recent years and we still continue to think of it as an attractive roll-up candidate in the ongoing consolidation phase of tech and communications. Shares have recovered off the low of $5.33 today, but that took out the old 52-week range of $5.35 to $10.64.

There are just about always new stocks hitting 52-week lows despite what the broad tape indicates on any given day. When you see many names in related sectors hitting 52-week lows, it becomes impossible to not recognize a trend. Many of these companies are reaching levels that the valuation is becoming very attractive. Unfortunately, technology buyers generally like to buy growth over attractive valuations. There is also that ongoing belief that companies hitting 52-week lows are doomed to keep hitting 52-week lows.

JON C. OGG

Filed under: HI/LOW, PC Companies, Semiconductor, Technology Companies, Telecom, Trading Alert, Value Investing Tagged: ARRS, ARTG, ATMI, CSC, FORM, HPQ, LOCM, PGI, PLXS, POWI, TINY

Top 10 Analyst Upgrades, Downgrades, Initiations (AEP, ARRS, AGO, IRE, ESRX, KBH, MTL, MU, RFMD, SPG)

247wallst — Wed, 02 Dec 2009 12:55:05 +0000

These are ten of the top analyst upgrades, downgrades, and initiations seen from early Wall Street research calls this Wednesday morning:

American Electric Power (NYSE: AEP) Started as Buy at Deutsche Bank.
Arris Group Inc. (NASDAQ: ARRS) Raised to Buy at UBS.
Assured Guaranty Ltd. (NYSE: AGO) Raised to Outperform at KBW.
Bank of Ireland (NYSE: IRE) Raised to Buy at Goldman Sachs.
Express Scripts (NASDAQ: ESRX) Raised to Overweight at JPMorgan.
KB Home (NYSE: KBH) Raised to Outperform at Credit Suisse.
Mechel OAO (NYSE: MTL) Cut to Underperform at Credit Suisse.
Micron Technology Inc. (NYSE: MU) Reiterated Buy ($10 target) at Auriga.
RF Micro Devices Inc. (NASDAQ: RFMD) Raised to Buy at UBS.
Simon Property Group Inc. (NYSE: SPG) Started as Outperform at KBW.

You can join our open email distribution list to receive daily emails with analyst upgrades and downgrades, top day trader alerts, market rumors, merger activity, IPOs and secondary offerings, Warren Buffett and guru activity and more.

Jon C. Ogg

Posted in Analyst Calls, Pre-Market Activity, Trading Alert Tagged: AEP, AGO, ARRS, ESRX, IRE, KBH, MTL, MU, RFMD, SPG

Top Analyst Downgrade/Cautious Calls (AIG, ARRS, CHK, DVN, IGT, PEP, RIMM)

247wallst — Tue, 06 Oct 2009 12:00:13 +0000

These are Tuesday’s top pre-market analyst downgrades or cautious research calls seen out of Wall Street:

American International Group (NYSE: AIG) Resumed as Neutral at UBS, so technically not a downgrade.
Arris (NASDAQ: ARRS) Cut to Underperform at Jefferies.
Chesapeake (NYSE: CHK) Cut to Underperform at Credit Suisse.
Devon Energy (NYSE: DVN) Cut to Underperform at Credit Suisse.
International Game Tech (NYSE: IGT) Cut to Buy from Conviction Buy List at Goldman Sachs.
Pepsico (NYSE: PEP) removed from the Focus List at Credit Suisse.
Research in Motion (NASDAQ: RIMM) Started as Underperform at Bernstein.

You can join our open email distribution list which goes out several times per week for reminders of top day trader alerts, top analyst upgrades and downgrades, IPO’s, key secondary offerings, guru investor data on Buffett and others, mergers, and more.

JON C. OGG
OCTOBER 6, 2009

Posted in Analyst Calls Tagged: AIG, ARRS, CHK, DVN, IGT, PEP, RIMM

Top Analyst Upgrades (ARRS, ASH, FCS, GME, ONNN, RTN, RVBD, VOD)

247wallst — Wed, 01 Apr 2009 11:49:00 +0000

These are the top pre-market analyst upgrades or positive calls from Wall Street which we have seen early this Wednesday morning:

Arris (ARRS) Started as Overweight at Thomas Weisel.
Ashland (ASH) Raised to Overweight at JPMorgan.
Fairchild Semi (FCS) Raised to Buy at UBS.
GameStop (GME) Started as Buy at Needham.
ON Semiconductor (ONNN) Raised to Buy at UBS.
Raytheon (RTN) Started as Outperform at Morgan Keegan.
Riverbed Technology (RVBD) Started as Overweight at Thomas Weisel.
Vodafone (VOD) Raised to Buy at Goldman Sachs.

JON C. OGG

Posted in Analyst Calls Tagged: ARRS, ASH, FCS, GME, ONNN, RTN, RVBD, VOD

Top 10 Pre-Market Analyst Calls (AA, ACAS, NLY, ARRS, BYD, CCJ, INTU, ISRG, MCHP, PETM)

247wallst — Wed, 11 Jun 2008 06:31:57 +0000

These are ten of the analyst calls we are focusing on this Wednesday morning in the early pre-market hours:

Alcoa (NYSE: AA) cut to Neutral at JP Morgan.
American Capital (NASDAQ: ACAS) started as Neutral at Robert W. Baird.
Annaly Mortgage (NYSE: NLY) cut to Neutral at JPMorgan.
Arris (NASDAQ: ARRS) cut to Perform at Oppenheimer.
Boyd Gaming (NYSE: BYD) raised to Neutral at Banc of America.
Cameco (NYSE: CCJ) raised to Buy at UBS.
Intuit (NASDAQ: INTU) started as Neutral at Goldman Sachs.
Intuitive Surgical (NASDAQ: ISRG) started as Outperform at William Blair.
Microchip (NASDAQ: MCHP) cut to Neutral at JPMorgan.
PETsMART (NASDAQ: PETM) raised to Overweight at JPMorgan.

Jon C. Ogg
June 11, 2008

The 52-Week Low Club (AMLN, ARRS, AU, ED, GCI, IACI, IUSA, PCG, SLRY)

247wallst — Fri, 15 Feb 2008 18:28:06 +0000

Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) is becoming a regular in this club. Yet another low of $28.02 intraday from a high of $53.25. It actually closed at $28.62, so it closed above the prior $28.41 low.

Arris Group Inc. (NASDAQ: ARRS). After an 86% drop in profit, shares plunge, targets are cut, and analysts downgrade, Arris lost 30% today and closed down at $5.50 from a former low of $6.91. The 52 week high is $17.89.

AngloGold Ashanti Ltd. (NYSE:AU) A gold stock on the 52-week lows? Power issues prevail over high commodity prices… ouch! Trading at $33.75. The 52 week range is $33.80 to $51.35.

Consolidated Edison Inc. (NYSE:ED). $10 million lawsuit in the working from a mid-summer accident. Shares down to $42.40, but $41.96 was the intraday low. The 52 week range is $42.35 to $52.90.

Gannett Co., Inc. (NYSE: GCI). It’s amazing when even a Warren Buffet stake won’t help a newspaper. Shares down to $31.90, prior 52-week range $31.97 to $63.50.

IAC/InteractiveCorp. (NASDAQ: IACI) has been under review for our special situations letter, although it has not yet been added with any formal recommendations. Shares actually closed up marginally at $21.88 after falling down to a low of $21.56; with a 52 week range of $21.80 to $52.90.

infoUSA Inc. (NASDAQ: IUSA) With such a lame Super Bowl commercial, what else could one ask for? Trading in at $7.82, but it traded as low as $7.50 today; preior range was $7.76 to $11.30. We recently panned this one for our "10 Stocks Under $10" letter ahead of the big game.

PG & E Corp. (NYSE: PCG). As a reward for awards for environmental stewardship, this utility is given a new low. Trading at $39.85 it closed up marginally at the end of the day, but it saw $39.19 earlier today; 52-week trading range is $39.45 to $52.17.

Salary.com, Inc. (NASDAQ: SLRY). We featured Salary.com on our "10 Stocks Under $10" letter as one of the worst ideas for an IPO of internet stocks and having potentially a fair value of $5 to $6 per share. Today, it reached a new low of $8.00 after a late morning nose-dive before coming back to close "only" down 2.8% at $8.32. The prior 52-week range was $8.31 to $16.32.

Douglas A. Mcintyre
February 15, 2008

Top 10 Pre-Market Analyst Calls (ADCT, ARRS, EL, FLML, GERN, HD, LOW, MCD, MEDX, NOVL, NMX, DIS)

247wallst — Tue, 29 Jan 2008 07:54:17 +0000

These are not the only pre-market analyst calls that are moving stocks, but these are the calls that 247WallSt.com is focusing on:

ADC Telecom (NASDAQ: ADCT) and Arris (NASDAQ: ARRS) raised to Buy at UBS.
Estee Lauder (NYSE: EL) raised to Buy at UBS.
Flamel (NASDAQ: FLML) raised to But at Merriman Curhan Ford.
Geron (NASDAQ: GERN) raised to Buy at UBS.
Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW) started as Market Perform at Morgan Keegan.
McDonald’s (NYSE: MCD) downgraded to Peer Perform at Bear Stearns.
Medarex (NASDAQ: MEDX) started as Buy at UBS.
Novell (NASDAQ: NOVL) raised to Buy at Jefferies.
NYMEX (NYSE: NMX) downgraded to Hold at Citigroup.
Walt Disney (NYSE: DIS) downgraded to Sell at Citigroup.

Jon C. Ogg
January 29, 2008

52-Week Low Club: Transport, Semiconductors & Financials (January 2, 2008)

247wallst — Wed, 02 Jan 2008 16:23:11 +0000

Truckers led the drop after a fake $100 oil print and after a YRC Worldwide (NASDAQ: YRCW) acquisition write-down, pulling down Arkansas Best (NASDAQ: ABFS) and others. With no surprise, airlines followed suit with Airtrain (AAI), AMR Corp. (NYSE: AMR), Continental Airlines (NYSE:CAL), Delta (NYSE: DAL), FedEx (FDX), Jetblue (NASDAQ:JBLU), Mesa Air (NASDAQ: MESA), Northwest Air (NYSE: NWA), Southwest Airlines (NYSE:LUV), US Air (NYSE: LCC).

Chip and tech stocks on 52-week lows: AMAT, AMD, ADTN, ARRS, ATML, BBND, CHRT, FCS, FEIC, IDTI, IM, KLAC, KLIC, LRCX, LSCC, LSI, MCRL, MRVL, MU, NSM, STM, TER, XLNX

Financial Giants on 52-Week lows: BAC, BBT, BSC, CYN, DFG, EFX, FIC, FITB, FHN, MCO, NCC, PNSN, SNV, SBP, WFC, ZION.

We kept the REIT’s and the usual suspects in retail off the list that have been here day in and day out (although many hit new 52-week lows). Here is the huge list of others 52-week lows:

Automatic Data (ADP), Cardinal Health (CAH), Career Education (CECO), Diebold (NYSE: DBD), EchoStar (DISH), Superior Offshore (DEEP), Dow Chemical (DOW), Eastman Kodak (EK), Emmis (EMMS), Ford (F), Fortune Brands (FO), General Motors (GM), Hasbro (HAS), Helen of Troy (HELE), Interpublic (IPG), Mattel (MAT), McClatchy (MNI), Media General (MEG), Nortel Networks (NT), Owens Corning (OC), Paychex (OPAYX), PHH Corp. (PHH), Playboy (PLA), Radio Shack (RSH), Rite Aid (RAD), Sherwin Williams (SHW), Sprint Nextel (S), Starbucks (SBUX), Starwood Hotels (HOT), Sun Microsystems (JAVA), Symantec (SYMC), Travelzoo (TZOO), VF Corp (VFC), Warner Music Group (WMG), Waste Management (WMI), Weight Watchers (WTW), Wendy’s (WEN)

Imagine how large this list would have been if retailers and REIT’s were included.
Jon C. Ogg
January 2, 2008