3SOF

Welcome to eliteG version 2.0  ;)  technical and fundamental analyst ;)


NSTC – Ness Technologies

Profile:  Ness Technologies, Inc. and its subsidiaries provide information technology (IT) and end-to-end business solutions worldwide. Its portfolio of solutions and services include outsourcing, system integration and application development, software and consulting, and quality assurance and training.

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Fundamental Analysis:
Currently reported(ttm):
P/E: 19.33  
P/S: 1.02
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Industry P/E:  24.66
Industry P/S:  1.37

NSTC already has an attractive valuation with trailing data but the company is growing its revenue by more than 20%!  Check out the bullish comments by CEO and CFO in the latest earnings report:

Fourth Quarter and Full Year 2005 Highlights:
- Quarterly revenues reached a record $105.1 million, up 28% year-over-year. Full year revenues increased to $385.4 million, up 27% from 2004.
- Quarterly operating income increased to a record $8.0 million, while full year operating income excluding non-cash stock compensation expenses reached $28.4 million, up 35% from 2004.
- Quarterly net income reached a record $6.8 million, and full year net income increased to $21.7 million, up 51% from 2004.
(Read the full and detailed report: http://biz.yahoo.com/prnews/060216/ukth006.html?.v=50)

With strong guidance for growth and a current low valuation NSTC is a superior value play.

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Technical Analysis:

NSTC has broken out of long-term resistance as well as a symmetrical triangle with above average volume.  The stock used the 50day moving average to consolidate and is now springing away.  With support close at hand (11.25-11.00) and an impulse move out of bullish consolidation, the timing seems perfect to enter a position in NSTC.

Long-term:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=18066)

Medium-term:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=18067)

Short-term:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=18068)

Our Trade:

With fundamental valuation and technical timing lined up.. it is time to enter a position in NSTC!

We will buy NSTC @ market open.

update NSTC:

We bought NSTC @ 11.71.  This play really looks solid from both a fundamental and technical aspect.  NSTC is under-valued and has support in place after breaking out of its triangle.  We will set our initial exit plan around the $11 support level and hopefully be able to move this up soon.  Our targets are much higher as discussed in the original trading plan.

We are holding NSTC but will sell if it is set to close below 10.95.

update NSTC:

Powerful move today!  :o  No news that I can find to spark it.  Perhaps many investors realized what "Superior Value" they had here.   :D

The stock remains undervalued and we are looking to make at least 20% on this trade.  Now with this strong move it is possible to reduce our risk by moving out stop higher.  Hopefully we will move it even higher soon.  >:D

We will hold NSTC unless it closes below 11.64.

Maybe it was in anticipation of this release? http://www.justloadit.com/pr/6200

Great call Wizard, Great timing ! ;) ;D :o
Applaud the work. ;)

Quote from: digdug42 on March 31, 2006, 09:09:07 AM
Maybe it was in anticipation of this release? http://www.justloadit.com/pr/6200

perhaps  ;) thanks for the link dig!

Quote from: setravis on March 31, 2006, 09:11:49 AM
Great call Wizard, Great timing ! ;) ;D :o
Applaud the work. ;)

Thanks Hawkeye  8)

update NSTC:

Nice pullback into a hammer.. finding support at the 5ema and a sharp trendline.  ;)  Lets see if the hammer will be confirmed as support now.  8)

update NSTC:

Great consolidation here.  Lets see if NSTC wants to move up and out this week.  Still very undervalued and we are looking for at least 20% gain on this position.  If things dont go our way we have a nice stop.  ;)

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Position Started: bought NSTC @ 11.71 on 3/27/2006
Current Order Status: Hold
Exit: on close below 11.64
Target: n/a
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update NSTC:

NSTC continues to consolidate.. 12.15 seems to be support.. but we will hold our exit in place around the 50ma.  The 20ema may provide a push this week.  ;)  This stock remains very undervalued.  Earnings are out on May 8th(before market open).

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Position: bought NSTC @ 11.71 on 3/27/2006
Order: Hold
Exit: on close below 11.64
Target: n/a
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update NSTC:

NSTC seems to be in a bull flag consolidation.. when broken upwards this can lead to a very nice move.  These value plays can take longer to move but they are truly backed up by some very nice fundamental data.  We need to keep the date 5/8 in mind.. this when NSTC has earnings.  As of now we would be a holder through earnings.  I am removing the last exit order and I will continue to evaluate on close data.

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Position: bought NSTC @ 11.71 on 3/27/2006
Order: Hold
Exit: n/a
Target: n/a
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Expect a strong move up today for NSTC ;).. finally :D

It looks that IBD finally read my analysis!  :D

"6:26AM Ness Tech profiled in New America Section of IBD (NSTC) 12.14 : IBD reports the co is a supplier of outsourced tech service. Their global expansion program, launched in 2001, also is growing. Overseas sales now account for more than half of the co's total. Much of the co's future growth is expected to come from India. Execs have stated they expect demand for Indian outsourcing to remain strong for at least four to five years. Most of the work performed in India is for U.S. cos. Their clients include Pfizer (PFE), Johnson & Johnson (JNJ), Citigroup (C) and Lockheed Martin (LMT)."

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Quote Investor's Business Daily
Israeli Tech Firm Turns Youthful Optimism Into Global Expansion
Wednesday May 3, 7:00 pm ET
Marilyn Alva
http://biz.yahoo.com/ibd/060503/newamer.html?.v=2

When Ness Technologies opened for business in 1999, it was armed with $50 million in venture capital funds and a desire to become a global force as a supplier of outsourced tech services.

"Maybe that was naive," said Chief Executive Raviv Zoller.

Or maybe not. Today Ness (NasdaqNM:NSTC - News) operates in 16 countries. It has averaged 23% annual sales growth the past five years, with sales reaching $385.4 million in 2005. The goal is to reach $1 billion in sales by 2009.

Ness got off to a running start by consolidating a handful of tech firms it bought in Israel, where the company is based. Its buyouts included the product and services arm of tech giant SAP (NYSE:SAP - News).

"It took us less than three years to become No. 1 in Israel," Zoller said.

The company continues to expand its business in Israel.

Last fall it won a $10 million contract to develop and implement Israel Defense Forces' next-generation central command and control system.

Meanwhile, Ness' global expansion program, launched in 2001, also is growing. Overseas sales now account for more than half of the company's total.

"We've built critical mass in India and Eastern Europe, and we're starting now to focus more on Asia-Pacific, where business is still relatively small," Zoller said, speaking from a cell phone in Thailand.

Acquisitions have contributed about 12% of the company's annual sales growth over the last five years, he says.

Last year Ness acquired three IT services outfits in Eastern Europe -- one each in the Czech Republic, Romania and Slovakia.

Ness secured a foothold in India in 2003 when it acquired a U.S.-based IT-services company doing business there. The acquisition served as a springboard for further expansion in the country.

"The important thing is that they are growing organically as well, not just from acquisitions," said Merrill Lynch analyst Greg Smith. "They haven't had any problem bringing in new business."

Sometimes new business has proved too much of a good thing, however.

In the fourth quarter Ness had to begin work on three big new contracts all at once, instead of on a staggered basis. Due to upfront expenses, execs lowered their prior earnings' forecast. The stock took a hit.

"It's a good problem to have, but every quarter there was an execution issue or two that caused some disappointment," Smith said.

Some of it had to do with growing pains.

"Look, they're a relatively small global company with IT services in multiple countries, so there's a high level of complexity," Smith said.

He says management "seems to have their arms around prior small issues that hurt them."

Ness' financial performance is certainly solid enough. The company has averaged 68% annual earnings growth the last three years. 2005 profit grew 23% from the prior year to 64 cents a share.

First-quarter earnings are due to be reported on May 8. Analysts polled by First Call expect earnings to come in at 18 cents a share, up from 15 cents a year earlier. Full-year profit is seen rising 28% to 82 cents.

Much of the company's future growth is expected to come from India. Execs have stated they expect demand for Indian outsourcing to remain strong for at least four to five years.

Most of the work performed in India is for U.S. firms, Zoller says. Ness' clients include Pfizer (NYSE:PFE - News), Johnson & Johnson (NYSE:JNJ - News), Citigroup (NYSE:C - News) and Lockheed Martin (NYSE:LMT - News).

With its recent $25 million purchase of offshore services provider Innova Solutions, Ness now employs 2,100 people in three cities in India: Bangalore, Mumbai and Hyderabad.

Though Innova is based in California, most of its employees work in India. Innova, which took in more than $30 million in revenue last year, strengthens Ness's financial services practice.

Ness focuses on several sectors: financial services, government and defense, life sciences and health care, telecom and utilities, and independent software vendors.

"The two fastest-growing verticals are independent software vendors and financial vendors," Zoller said.

Ness's dedicated labs in India serve as cost-saving extensions of independent software clients' research and development units. Software customers include Business Objects (NasdaqNM:BOBJ - News), Chordiant (NasdaqNM:CHRD - News) and Cobalt Group.

Ness counts more than 500 clients worldwide. Most are repeat customers. No single customer accounts for more than 5% of revenue, Zoller says.

"It makes our growth very balanced," he said.

Competition is heated. Ness often competes with much larger firms such as Accenture (NYSE:ACN - News), IBM Consulting (NYSE:IBM - News) and Infosys.

To give it more muscle, Ness also partners with big tech firms. It has key partnerships with EMC (NYSE:EMC - News), BEA Systems (NasdaqNM:BEAS - News), SAP and Microsoft (NasdaqNM:MSFT - News).

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Here is a graph included from the IBD report and the current chart of NSTC

NSTC gapping very nice!(see the previous post)

Very undervalued.. all NSTC needed was some marketing and we got it from IBD.  Watch this baby rock today!

Breakout is 12.88  ;)

Hey G, sure you are aware about earnings this monday, just looking for a pre-earnings opinion. They did miss earnings a touch in feb and there was a downgrade also. Some insider selling late last year, but other than that things do look good.

Great pick

Thanks for your help

uc

Cheers

Quote from: usedcasting on May 05, 2006, 08:44:52 AM
Hey G, sure you are aware about earnings this monday, just looking for a pre-earnings opinion. They did miss earnings a touch in feb and there was a downgrade also. Some insider selling late last year, but other than that things do look good.

Great pick

Thanks for your help

uc

Cheers

Thx for the reminder uc.. we are definately holding through and dont want to lose our position.  Personally I feel a lot better on holding through when we have a value play and a bit of a cushion..  I think earnings could impress and the IBD exposure was well timed.  NSTC is showing a lot of strength pre-market!

Quote from: eliteG on May 04, 2006, 09:16:22 AM
Breakout is 12.88  ;)

You heard it here first!   :o

Another great pic...and I thank you. 


Jody

Quote from: 422fwhp on May 05, 2006, 10:39:18 PM

Quote from: eliteG on May 04, 2006, 09:16:22 AM
Breakout is 12.88 ;)

You heard it here first! :o

Another great pic...and I thank you.


Jody

You're welcome Jody  :)

update NSTC:

NSTC broke out of its bull flag on solid above average volume and continued the day after with even more volume.   ;)  Now we await the earnings release pre-market tomorrow(Monday).  Just to be safe let us set a stop at our entry.  Earnings could really get this stock on fire.. the stage is set.  >:D

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Position: bought NSTC @ 11.71 on 3/27/2006
Order: Hold
Exit: stop @ 11.71
Target: n/a
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Earnings out.


Ness Technologies Announces Record First Quarter 2006 Financial Results
Monday May 8, 6:14 am ET
Net Income Rises 29% Year-over-Year on a 21% Increase in Revenues

HACKENSACK, New Jersey, May 8 /PRNewswire-FirstCall/ -- Ness Technologies, Inc. (NASDAQ: NSTC - News), a global provider of IT services and solutions, today announced financial results for the first quarter ended March 31, 2006.

ADVERTISEMENT
First Quarter 2006 Highlights:

- Diluted net earnings per share was $0.18, compared to $0.14 in the first quarter of 2005.

- Operating income increased to $7.9 million, up 35% year-over-year.

- Net income from continuing operations reached a record $6.3 million, up 29% year-over-year.

- Revenues reached a record $107.0 million, up 21% year-over-year.

- Backlog increased to a record $527 million, up 28% year-over-year.

- Global workforce increased by 1,055 sequentially to 7,000.

- Acquisition of Innova Solutions was completed, strengthening Indian offshore capabilities.

"The strength of our first quarter results, including record revenue, net income from continuing operations and backlog sets a solid foundation for achieving our business objectives in 2006, as we enter our second year as a public company," said Raviv Zoller, President and Chief Executive Officer of Ness Technologies. "Once again, we showed significant momentum in our Eastern European and Indian offshore operations, as well as in our financial services and defense verticals. We also reached two significant benchmarks in the quarter as our backlog surpassed the $500 million milestone and our global headcount reached 7,000 employees. We remain optimistic in our outlook for 2006 based on our proven strategic business model, a robust demand environment within our key geographic and vertical business segments as well as our strong backlog."

Ness' first quarter 2006 revenues totaled $107.0 million, an increase of $18.6 million or 21%, compared to $88.4 million in the first quarter of 2005.

First quarter 2006 operating income increased to $7.9 million, an increase of $2.0 million or 35%, compared to $5.9 million in the first quarter of 2005.

First quarter 2006 net income increased to $6.3 million, an increase of $1.4 million or 29%, compared to $4.9 million in the first quarter of 2005. Diluted net earnings per share for the first quarter of 2006 were $0.18 compared to $0.14 in the first quarter of 2005.

Backlog as of March 31, 2006 increased to $527 million, up 28% compared to $412 million as of March 31, 2005.

"During the first quarter Ness continued to gain operating leverage, as we increased the billable component of our worldwide staff to 87.4% of total employees," stated Ytzhak Edelman, Chief Financial Officer and deputy to the CEO, Ness Technologies. "We continue to focus on improving operating efficiencies and managing financial expenses across our global platform. Despite the significant use of cash in the first quarter for acquisition payments and prior-period tax payments, we were able to significantly reduce our financial expenses, by 86% compared to the first quarter of 2005. We remain focused on further increasing our operating and net margin, managing our debt-to-equity ratio and integrating our new acquisitions efficiently. These first quarter financial results also mark a change in our quarterly reporting process, as we begin reporting segment data for the first time - in keeping with the strategic alignment of our organizational structure implemented over the last few months."

Guidance

For the second quarter 2006 Ness expects to generate revenues in the range of $112 million to $118 million and diluted net earnings per share in the range of $0.14 to $0.17. This guidance takes into account the integration costs associated with our acquisition of Innova, which are expected in the second quarter.

For the full year 2006, Ness reiterates its guidance of revenues in the range of $470 million to $485 million and diluted net earnings per share in the range of $0.80 to $0.85, excluding an expected full-year $0.01 impact associated with expensing of stock-based compensation under the Financial Accounting Standards Board's Statement 123®, which the Company adopted effective January 1, 2006.

Conference Call Details

Ness Technologies President and Chief Executive Officer, Raviv Zoller, and Chief Financial Officer and deputy to the CEO, Ytzhak Edelman, will conduct a conference call to discuss the first quarter 2006 results, which will be simultaneously webcast at 9:00 A.M. Eastern Time / 6:00 A.M. Pacific Time on Monday, May 8, 2006.

To access the Ness Technologies first quarter 2006 earnings conference call participants in North America should dial 1-800-399-0427 and international participants should dial +1-706-634-5453. A live webcast of the conference call will be available on the investor relations page of the Ness Technologies corporate web site at www.ness.com. Please visit the web site at least 15 minutes early to register for the teleconference webcast and download any necessary audio software. A replay of the call will be available on the web site approximately two hours after the conference call is completed.

Although the numbers just met.. these earnings portray why NSTC deserves a higher valuation!  Backlog and revenue guidance is over mkt cap.. solid earnings growth.. a very stable and growing young company.  Showing $13 pre-market so far..  >:D

Congrats here G, you definitely found a value stock.

uc.

PS. This holding over earnings is nerve racking.

Quote from: usedcasting on May 08, 2006, 08:40:07 AM
Congrats here G, you definitely found a value stock.

uc.

PS. This holding over earnings is nerve racking.

Thx uc  :)..  holding over earnings is tough but with the right trade plan it can be done a bit more safely.. especially with a beautifully under-valued stock  ;)

And went down now  :-[  Just don't get responses to earnings reports. Definitely hope it will recover.

Amarens

Quote from: Amarens on May 08, 2006, 09:43:56 AM
And went down now  :-[  Just don't get responses to earnings reports. Definitely hope it will recover.

Amarens

It is perhaps the IBD folk who were hoping for some amazing results.. thats ok.. our stop is in place and this definately seems like an over-reaction.

Probably has something to do with not raising guidance for the year and the following:

"The company said it expects second-quarter earnings to be between 14 cents and 17 cents per share ...

Analysts, on average, expect a second quarter profit of 18 cents per share...."

NSTC just touted by Crammer tonight on Mad Money FYI.

thx for the update wise  ;D.. Cramer to the rescue.. we missed the stop by .04 and now back up... I wouldn't be surprised if Cramer was a 3stocksonfire member, lol

NSTC back up to 12.70 after-market  8)

who says there isn't action in the 3SOV portfolio?  :D

Cramer on NSTC

"As for Ness, the company offers software outsourcing, network-security-systems integration and consulting, meaning that it overhauls an existing technology network to make it more efficient and cheaper.

Cramer said that Ness also has good bloodlines. It has worked on a project for Coca-Cola, and it digitized the entire Israeli justice system. The company's earnings results were in line with expectations, and it reaffirmed its annual guidance.

Because it didn't blow away the numbers as expected, Cramer said that the stock fell and now offers an opportunity to pick it up on the cheap."
http://www.thestreet.com/_yahoo/funds/madmoneywrap/10284329_2.html

I think the Cramer pump presents a great opportunity to short. The ole gap fade. NSTC is unlikely to get through the $12.75 - 13.00 resistance area unless it gaps above it in the morning. I know if I were long I'd be selling unless it gapped above, and I'd feel like I'd been given a get out of jail free card after today's Big Red candle.

Faded the gap per plan. It's not really a gap since it opened within yesterday's trading range, but the idea is similar. Doesn't look like I'm going to hit a home run with this. More like infield hit.

I'm out at 12.48. Can't trust Mr. Cramer.

jorgegr

update NSTC:

NSTC has had a crazy few days.. IBD mention, earnings, Cramer mention .. and we survived!  We just missed our stop on Monday.. and today we had a nice move out of the bull flag.  The fact remains that NTSC is a great value stock.. fwd PE estimate  12.14.. industry avg over 20.. give it time.  ;)

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Position: bought NSTC @ 11.71 on 3/27/2006
Order: Hold
Exit: stop @ 11.71
Target: n/a
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I wish I'd held onto my short! I settled lunch money when I could have held and made Mercedes money. :P  Probably a good stock to go long on again after the dust settles.

Is NSTC showing a reversal bullish pattern? Can any of the TA wizards help me out. And can the last three days be considered 'three white soldiers? Think is it starting to look positive again. Especially considering the market the last week.

Any input would be appreciated.

Amarens

It is starting to like an army to me  ;). Any body knows what's up?

Updated chart.

Amarens

Hey Amarens, my guess is it was just too oversold. The company is strong with good growth, so I'm hoping for a good move.

Terliso, I have charted your 3 magics. How would this stock fit into your profile. Good, bad or indifferent!

Thanks

uc.

Anyone get a chance to listen to the earnings call?

laterz...Jody

I'm still following NSTC (in it too). It's been doing nicely  :). I would love a real TA on it from one of the experts, Frederick, Melf???

Today NSTC is up again. Sixth day in a row, making it's way to it's most recent highs in April/May of this year. News is good, pattern strong. Would like to hear opinions from others where they see NSTC go. I think $ 12,- will be a critical barrier to take.

Amarens

Got stopped out yesterday at $ 12,18  >:( Little bumped. But hey, profits got locked in  :) :). Still think NSTC looks good and will watch it closely and see if I can get back in at or near TL. Can't upload a chart but according to me that stands at $ 12,31 today.

Would sure love to hear some other opinions.

Good trading to everybody.
Amarens

NSTC traded on VERY low volume all day........until the last few minutes when the volume shot up and stock broke out of a long and well defined base. $11.51 close.

http://stockcharts.com/h-sc/ui?s=NSTC&p=D&b=5&g=0&id=p59191861522

http://stockcharts.com/h-sc/ui?s=NSTC&p=10&b=5&g=0&id=p71558274221