Santa Likes Tech Momentum Too
|Written by GSCR Staff|
|Tuesday, 23 December 2014 07:08|
In yesterday’s Guide we went into the mechanics of the January effect, and emphasized looking for some promising stocks that have been downtrodden this year or those who are at or near 52-week highs.
We go to the latter, with another hot tech oldie but goodie.
Way back in February 2013 we made DSP Group, Inc. (NASDAQ – DSPG - $11.20) one of our 30-30 picks at a price of $7.82. We definitely took a hit on this pick over the next six months as the stock bottomed out at $6.50 around Labor Day weekend last year. Since then the stock has steadily climbed to current price levels representing a 43% price increase since our first feature in the 30-30.
Below is the 21-month chart for DSPG showing the 200-day EMA line as well. It can be clearly seen that the stock is trading well above this important technical metric related to momentum.
DSPG 21-Month Chart
DSP Group, Inc. is a leading global provider of wireless chipset solutions for converged communications. Delivering semiconductor system solutions with software and hardware reference designs, DSP Group enables OEMs/ODMs, consumer electronics (CE) manufacturers and service providers to cost-effectively develop new revenue-generating products with fast time to market.
With a quick glance at our basic value metric, P/E, we see the trailing P/E at a sky high 200. The forward P/E is nearly 75% less at 58. The Company continues to introduce new products and services as well as create partnerships and other deals. Earlier this quarter the DSP Group entered a joint ULE (Ultra Low Energy) OTT (Over the Top) reference design for IoT (Internet of Things) solutions with Yoga Systems, a leading provider of cloud based platform for smart home and IoT. The joint solution leverages DSP Group's advanced IP/DECT/ULE SoC and firmware, managed by Yoga Systems' cloud-based IoT management and rules engine. With nearly $24 million in cash and no debt as of the end of 3Q14, the DSP Group appears to be positioned to continue solid growth.
DSPG has clearly begun an accumulation phase with a 27% increase over the last three months while trading at a relatively high volume of over 100,000 shares per session. We think the stock climbs to $12.50 in by the end of 1Q15.
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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