Hot Technology Play in Crazy Market – ItraLinks Holdings

The market chaos continues, but as we mentioned in the Guide this week, we like technology in the small cap space. Making the right pick is crucial. Below is the 2-year chart for IntraLinks Holdings, Inc. (NYSE– IL - $8.19).

One key technical factor to observe is an approximate head and shoulders pattern that started in the fall of 2014 and appears to be entering its final trough presenting a buying opportunity using this analysis technique.

IL 2-Year Chart

(Source: www.otcmarkets.com)

For those not hip to the latest and greatest in business Information Technology, The Cloud is all the rage. Do not ask us to explain it in great detail, but basically the concept is the use of internet applications in an on-demand fashion analogous to Just-In-Time when it comes to manufacturing. IntraLinks is at the cutting edge of this technology. The Company is a global technology provider of secure enterprise content collaboration solutions and innovative Software-as-a-Service solutions. IntraLinks software is designed to enable the exchange and control of information between organizations securely and compliantly when working through the firewall. The Company is poised to profit from increased B2B spending in 2016.

Another technical indicator that we are fond of is short float. The metric comes in at a low 2.3% for IL. The revenue picture is also rosy. The Company is on track to meet the $275 million in revenue set by analysts’ consensus, representing an 8% increase over 2014. 2016 revenue is forecast to grow another 6.5% to $293 million. Revenue is a great segue into gross margin. IntraLinks is reporting 72% for this metric, significantly above the industry average of 66%. Finally, the Company has met or exceeded EPS estimates two straight quarters. Positive financial reporting is going to be critical this year.

We believe IL is set to go on a run this year as firms expand and improve IT. The stock should reach $11 by the end of 2Q16.

Have a great day!

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