The summer of 2013 is expected to be anything but dull.
Tensions among investors and market volatility are high as we
weigh the effects of QE tapering amidst a world with struggling
Stocks that have global discretionary exposure or
unjustifiably high valuations have gotten hit the hardest over
the last month or so.
If economies do weaken and consumers slow their spending
habits once again, there are a few areas that could still see
strong growth. In fact, today's bull of the day might
actually benefit from consumers staying home, surfing the web or
engaging in more online content.
Think about them as a quasi-defensive growth company; sure
they have competition, but they are one of the best at what they
do and it seems that investors may be gearing up for the company
to make another leg higher as short interest dropped dramatically
as of late.
The most recent short interest data has been released by the
Nasdaq for the 05/31/2013 settlement date, showed a 6,608,451
share decrease in total short interest from 10,971,242 or 37.59%
since 05/15/2013. This shift happened even as the stock
Who are they?
is more than just a "cloud" company; the company provides the
leading cloud platform for helping enterprises provide secure,
high-performing user experiences on any device, anywhere.
The proliferation of mobile devices from the likes
Samsung, HTC, Google
and more all will add to the need for Akamai's services.
If you've ever shopped online, downloaded music, watched a web
video or connected to work remotely, you've probably used
Akamai's cloud platform. The company's promise is to ensure the
best online experience on any device, anywhere.
Akamai delivers roughly 20% of ALL web traffic globally.
Akamai helps enterprises accelerate innovation in the
hyper-connected world by removing the complexities of technology
and handling all the "leg work" in getting content from the
company to the consumer and beyond.
Their "Intelligent Platform" reaches globally and delivers
locally, providing customers with unmatched reliability, security
and visibility into their online business. This platform
comprises more than 95,000 servers located across nearly 1,000
networks in 70 countries worldwide and delivers hundreds of
billions of internet interactions daily.
The company also tracks and defends against "attack traffic"
on the internet, helping us all get the safest bandwidth
possible. Global internet traffic is not only growing
in raw content and users, but the speed at which we access that
content is also rising rapidly.
Most Zack's Rank #1 stocks have recently experience very positive
analyst momentum and Akamai is no exception.
After the company delivered a 24% beat last quarter (42cents
versus the Zacks Consensus for 34 cents), there have been a slew
of positive analyst revisions. The Zacks Consensus for the
current and next quarters as well as FY2013 and FY 2014 are all
higher than they were just 2 months ago, with none moving their
Akamai is expected to report Q2 results on July 24th and given
their Zacks Rank coupled with an earnings ESP of 8.11% in the
current quarter, there is a very good chance they will beat the
current Zacks Consensus for 37 cents. ESPs are also
positive for the future, which is a good sign for guidance.
AKAM has beat the Zacks Consensus earnings estimates 4 periods
in a row, exceeding expectations by an average of 13.7%.
Since gapping almost 17% above the 200 day moving average on
their last earnings report, the stock added another 15%, making a
new 52 week high of 48.47 over the last month.
Recently, shares have come down to their post gap price around
the $42.50 level, which is just above the 50 day moving average
Shares are in an odd area here; I'd like to see them trading
above the $43.07 area, which coincides with a key Fibonacci
level. If the stock breaks down here along with the broad
market, look for strong support around $39.50 and even more at
the 200 day moving average of $37.81.
The reality is that the intermediate bullish trend is intact,
and a buy around these levels wouldn't be catastrophic, but
Akamai's forward P/E of 26.5 may put it on the temporary chopping
block if the broad market corrects.
Look for an initial upside target of $47.25, with another 5%
breakout if shares eclipse the 52 week high.
Akamai is my favorite pick in the cloud space at the
a Zacks Rank #5 Strong Sell, doesn't look nearly as attractive
and trades at double the multiple and whileHewlett Packard
(Zacks Rank #3 Hold) is trying to move into the space, they may
have a long road ahead and are much less agile and "plugged in"
Jared A Levy is one of the most highly sought after traders in
the world and a former member of three major stock exchanges.
That is why you will frequently see him appear on Fox Business,
CNBC and Bloomberg providing his timely insights to other
investors. He has written and published two tomes,
"Your Options Handbook"
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. You can discover more of his insights and recommendations
through his two portfolio recommendation services:
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