|Written by GSCR Staff|
|Thursday, 16 January 2014 03:43|
In Monday’s Goldman Guide titled “What the Market is Telling Us” we said say yes to tech! Tech was a great play in a slowly improving economy for 2013 and appears be continuing and maybe even heating up in 2014. Look to the Google (NASDAQ – GOOG) acquisition of the smart thermostat and smoke alarm producer Nest this week for $3.2b billion. Google is looking to expand its product line into the high end ‘smart home’ product line. This is a clear example of mega tech players looking to add and expand product portfolios, and with plenty of cash on hand, buy-outs make more sense than organic development.
On a side note, home and personal security technology and software related to the ‘smart home’ has been a nice niche sector over the past year or so. We highlighted LifeLock, Inc. (NYSE – LOCK) around Valentine’s Day last year and the stock is up over 95%. This one is probably a keeper for now.
Actuate Corporation (NASDAQ – BIRT - $7.89) is another software and technology firm that is another hot micro sector – ‘Big Data’. The ActuateOne suite of integrated commercial products enables corporations and packaged application software vendors to develop and deploy custom business intelligence, analytic, and customer facing information applications targeting browsers and mobile touch devices. The Company offers a suite of business intelligence and reporting tools (BIRT)-based BI, analytics, visual data mining, and reporting features within the integrated ActuateOne suite, providing in-memory analytics, user configurable dashboards, ad-hoc query, interactive mobile and Web content, brochure reporting, and spreadsheet analysis. It also provides BIRT iHub, which powers, integrates, and manages BIRT-based information and analytic applications; and BIRT Analytics, an interrogative tool designed to allow business users to uncover trends, visually mine for unknown correlations, and perform time-series extrapolation for forecasts on data assets, such as social media, Internet data, machine generated data, and traditional corporate sources. Some of this may sound Greek, but a multitude of companies in all sectors are shelling out big money on software programs tailored to analyze ‘Big Data’ to add and keep customers.
From a stock perspective, BIRT is very attractive based on analysis with our three tier evaluation given current market conditions. The Daily Moving average is very bullish all the way out to 50 days. The stock has climbed nearly 11% on an average volume of over 200,000 shares traded per day over the last month in the beginning of this current accumulation phase. Finally, with forecasts for revenue of $146 million for 2014 and a healthy gross margin of 85%, the forward 12-month P/E is a low 21, compared to the trailing 12-month P/E value of 61.
BIRT is an attractive buy and should hit the $9.00 level later on this quarter, or early in 2Q14 at the latest.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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