Thursday, September 3, 2009

Louis Navellier, EXCH and PAR

A couple of sells for Louis Navellier's Emerging Growth subscribers this month.
In addition to some recent sell alerts (maybe I will come back oh these later on) he decided his subscribers should sell EZCH and PAR.


EZCH was a new buy in February 2009 issue of Emerging Growth (edited on february 6th).
EZchip Semiconductor (EZCH) is a great company in a smart transition. With a number of high-profile products in the computer realm, EZCH recently decided to shed some of its older products to focus on high-speed networking chips.
This is not only a smart move in these challenging times, since it trims EZchips overhead and production costs, but a smart move in the long run as the wireless revolution demands continued maintenance and improvements to networks all around the world.
6 February 2009 In the past four quarters, EZchip Technologies’ sales have risen 72.2% in the past four quarters, while its earnings have risen 160%. Much of the improving profitability of the company is not only due to its strong sales growth, but also the fact that the company’s operating margins are improving after it phased out its unprofitable products and operations. The stock is a great buy.

Buy Price $15.60
Buy below $19

February 13th weekly update
EZchip Swings to a Profit
New buy EZchip Semiconductor (EZCH) swung to a profit in the fourth quarter and posted a 67% rise in revenues. Believe it or not, this stock has no analyst coverage, so it’s difficult to calculate an earnings surprise, but the company did earn $1 million, or 4 cents a share, compared with a loss of $0.6 million, or 3 cents a share, in the year-ago period. Revenue rose to $9.6 million, and EZchip said that it is aiming to expand its business in 2009 and beyond, even in this challenging economic environment. The stock has trended up since Friday, and remains a great buy.

March 2009 issue
EZchip has phased out its legacy products to focus its network processor products. The company also closed its NetGuard subsidiary. Overall, the company’s sharper focus on its networking chips bodes well for future growth.
Buy below $14

April 2009 issue
EZchip Semiconductor (EZCH) has phased out its legacy products and closed its NetGuard subsidiary to focus on its networking chips. The one-time expenses may show up on the quarterly earnings report, but I have faith in the long-term prospects of this company. In the fourth quarter, EZchip's earnings rose five fold to $2.6 million or 10 cents per share compared with $0.4 million or 2 cents per share in the same quarter a year ago. Explosive growth like that proves this company deserves a place on our Buy List!

April 17th weekly update
Since last month’s issue, our Buy List is up 7%, led by Top 10 stocks EZchip Semiconductor (EZCH) and Interoil (IOC), which are both up 23.5%.

May 2009 issue
EZchip Semiconductor (EZCH) has been trying to streamline its business to focus more on its networking chips business. This stock has gained a lot of momentum since last month's issue, up 23% in just under four weeks. EZCH is scheduled to report earnings on May 7, where I expect another strong quarter.

May 8th 2009 weekly update
EZCH: EZCH Beats Estimates, but Lowers Outlook
Israel’s EZchip Semiconductor (EZCH) beat estimates during the first quarter, but lowered its revenue outlook for the full year, which has taken a toll on this stock’s share price. Revenue in the first quarter of 2009 totaled $9.8 million, an increase of 42% compared with the same period a year ago. Net income was $1.4 million or five cents a share. Analysts were expecting earnings of two cents a share, so EZchip posted a solid 150% earnings surprise.
Shares of this Top 10 stock are down 9% since last month’s issue because one of the company’s principal customers has said that it will substantially reduce its purchases of processors from EZchip in order to consume existing inventory. Needless to say, this will significantly impact EZCH’s revenue during the second quarter. The good news is that EZchip believes that sales by this customer will continue to grow, and its purchases of our stock’s processors will return to current levels no later than June 2009.

Not a single word on June 2009 and July 2009 issues

August 2009 issue
Upcoming Earnings Reports
Monday, August 3: EZchip Semiconductor (EZCH)...

August 7th 2009 weekly update
EZCH: EZchip Semiconductor Tops Estimates
On Monday, EZchip Semiconductor (EZCH) reported a net loss of 3 cents a share, but this was much narrower than analysts were expecting so the company posted an impressive 40% earnings surprise! Total revenue for the quarter also came in slightly above estimates.
The reason EZchip fell into the red this quarter is because one of its biggest customers decided to use up its existing inventory instead of purchasing new processors. This has been a problem for many businesses in the first half of 2009 as consumers cut back on spending. But EZCH's orders have already started to rebound before many of its competitors, and the company now forecasts it will exceed first-quarter 2009 revenue levels in the third quarter after this strong earnings report.
This stock is currently "on hold," so be sure to check our Buy List on Monday for any change in EZCH's fundamentals. Remember, I do NOT want you to sell any companies

September 2009 issue
I now want you to sell EZchip Semiconductor Ltd. (EZCH) and 3Par Inc. (PAR). EZchip posted an excellent 40% earnings surprise earlier this month, but I think the company is being a bit aggressive on their forward guidance and won’t be able to live up to their estimates. I want you to exit the stock now ahead of any possible downward revisions to third-quarter numbers.
Price around $12.


In his July 2009 issue Mr. Navellier told his subscribers to buy PAR. I do not have the exact date, but this issue should have been released at the very end of June or at the very beginning of July 2009.

Mr. Navellier was writing: 3Par Inc. (PAR) is a leader in the high-end data storage market. The company’s servers and software let large enterprises consolidate data management while allowing differentiated service levels—in layman’s terms, 3Par’s cutting edge products allow big companies to buy less equipment and actually do more, and that saves money in the long run. 3Par’s customers include large corporations and government agencies worldwide, with a client list that includes, Hilton Grand Vacations and the U.S. Army. PAR was founded by veterans of Sun Microsystems, and is the definition of a high-tech leader.
Needham recently initiated coverage on the company with a “Buy” rating, and with good reason. In its latest quarter, 3Par’s sales rose 36.6% to $48.5 million compared with $35.5 million in the same quarter a year ago. During the same period, the company posted a loss of $907,000, or 1 cent per share compared with a loss of $1.2 million or 2 cents per share. 3Par’s operating margins continue to improve, and it should be posting improving earnings in the upcoming quarters. The stock is a great buy and should ride the recent strength of the tech sector to big profits.

PAR price was between $11.00 and $12.50.

Nothing on August 2009 issue, but some words on August 8th weekly report: PAR: 3Par Beats the Street Our data storage provider 3Par (PAR) beat Wall Street's estimates Monday, breaking even for the quarter while Wall Street was expecting a loss. The company also topped expectations on sales, with reported revenue of $44.5 million compared with $43 million in the same period last year and forecasts of just $44.4 million.
Even though 3Par just broke even this quarter, the company still grew sales year-over-year in a very challenging market and this should not be overlooked. The stock's market share continues to expand, and this should continue in the coming months. PAR is the go-to firm for companies looking to boost their storage utilization rates and bring their costs down, and I continue to expect big things from this stock.

PAR was already below $10.

Finally, the September 2009 issue: 3Par is also a sell because their upcoming earnings are in question. The company managed a 100% earnings surprise in the last quarter by breaking even instead of reporting a 1-cent loss. However, looking forward, I no longer see a repeat performance. Analyst expectations have been revised downward for the coming two quarters and now is simply the right time to exit the stock.

Last week PAR closed at $9.14.


Anonymous said...

Louis Navellier is nothing more than a snake oil salesman. He's 90% salesman, 10% money manager. What's comical about his statement above, "EZchip posted an excellent 40% earnings surprise earlier this month, but I think the company is being a bit aggressive on their forward guidance and won’t be able to live up to their estimates," is his system has zero capabilities to forecast earnings estimates. His model tracks what other analysts think. So, in the case of EZchip, which has no analyst coverage, he has no idea what the earnings will be. Remember he's a quant guy, he does zero qualitative research. The bottom line was the stock's price started to fail so he bailed on the stock and made up his reason for exiting "I think the company is being a bit aggressive on their forward guidance." As all investors know, stock prices can decline for a number of reasons, and not all are related to fundamentals. For example, sometimes stock prices decline because mutual fund managers are raising cash to buy other stocks. Navellier's system is incapable of pinpointing why stock prices are moving higher or lower. His system only knows that prices are moving and it will always be attracted to stocks that have price momentum...he's a momentum manager. The bottom line is you shouldn't believe a word Louis Navellier says when he tries to make investors believe he is analyzing companies from a qualitative perspective. He has never visited a company or talked to a company's staff to assess their business viability is his entire career. He's not equipped to do it! Moreover, he's always on the road selling. So he doesn't have time to do granular analysis.

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