Finding Big Bargains in the Tech Sell Off (FNSR, DRWI, MRVL, CLWR, S)
Rising oil prices and global unrest are keeping the market on a roller coaster of late as jittery investors weigh risk, but savvy investors should remain diligent and look for undervalued stocks that are experiencing temporary market weakness but remain poised for sustained growth in 2011.
Underlying market strengths remain intact for companies like optical component specialist Finisar (FNSR); DragonWave (DRWI), a packet microwave systems provider for next generation IP networks; and Marvell Technology (MRVL), a provider of a wide portfolio of storage, communications, and consumer silicon products, according to Next Inning Editor Paul Williams, whose model portfolio has returned nearly 370% since 2002.
Finisar was selling for as high as $46 about a month ago, but currently sits in the mid-$20s. The company’s most recent earnings report provided guidance that fell short of Wall Street expectations.
Seasonal issues related to customer price negotiations and the Chinese market also weighed on the current quarter. The primary growth driver for FNSR is its Remote Optical Add/Drop Multiplexer (ROADM) and Wavelength Selective Switch (WSS) technology used in optical components and subsystems. FNSR has been experiencing double-digit growth for the products for the past year, and the pace should accelerate in the second half of the year.
DragonWave has pulled back significantly from its $14.10 high of January 2010, but communications networks are going to continue to expand, and DragonWave has established relationships with leading players involved in the build-out, including LightSquared, Clearwire (CLWR), and Sprint Nextel (S).
DragonWave’s position in the market has improved in past six months, and revenue and earnings will begin ramping during the second half of the year.
Disappointing results for its most recent quarter and disappointing guidance for its current quarter have kept Marvell sliding from a $21 peak in January to about $16. Marvell is the market share leader for hard disk drive (HDD) controllers, and is poised to expand its dominance. The company also has a growing presence in the expanding solid state drive (SDD) controller market.
In new reports taking in depth looks at tech names now trading at bargain prices, McWilliams identifies opportunities for investors ready to take advantage of recent market weakness to pick up potential winners on the cheap. Did Finisar fall too far, too fast, creating a rare buying opportunity? Is Marvell an unappreciated potential winner with exposure to several hot markets? Is Wall Street misunderstanding DragonWave’s potentially big role as a key player in the mobile bandwidth boom? These questions and more are discussed McWilliams’ recent reports, available free, with no strings attached, to trial members.
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A Special Message to FNSR Longs (Wall Street Sector Selector, 3/8/11)
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