SWIR

[wxmang]

Thanks guys!
Anyone else wanna chat about SWIR?
I am putting the "Zurich Axioms" to the ultimate test with SWIR.
I know you all must think I am a friggin idiot.
The Risk is getting very small at these prices.
The Reward is just phenomenal!

But the real question is:
Doesn't SWIR appear to be a takeover candidate at the current price?
With the Revenues it generates, Cash in the bank and Zero debt???
Cisco has to be eyeing this sucker...Has to be.. Or maybe Google even?

[David Randolph]

The chart looks like a train wreck, but today's volume is encouraging because MAYBE there has finally been some capitulation...

Consider GIGM's chart in early August when the stock broke down to $9. Fundamentals appeared to be awesome, but the chart didn't agree at all. In the end, fundamentals won. I think the same thing will end up happening with SWIR.

Tomorrow is a key day for this one.

I used to think this way too jorgegr, but after seeing what I've seen over the last 12 months, I believe one day of market action doesn't tell me anything about the future of a stock price.

But the real question is:
Doesn't SWIR appear to be a takeover candidate at the current price?
With the Revenues it generates, Cash in the bank and Zero debt???
Cisco has to be eyeing this sucker...Has to be.. Or maybe Google even?

Maybe, but I believe that hope/expectation can't be the reason for holding SWIR. I think takeovers are mostly unpredictable, unless one has inside information, which of course we don't. You buy undervalued stocks and they will rise because they're undervalued or because there's a takeover and that's it. It is good enough to know what is undervalued and what isn't, to know the actual reason why they'll move up or by what amount ... it shouldn't be done, even though sometimes I do that too.

Perhaps Garoh is right and SWIR just has to close that gap at $19.13 or touch the 200 days SMA at $19.36 again. It may even break these "key" support levels, I don't bother about that (I know Garoh will use stops, I don't even consider them).

What I see is a stock currently trading at 16 times next year projections of $1.21 EPS, which I believe are way too conservative. I believe that, from what I see in the real economic world and the "go mobile" trend everywhere, that SWIR will probably achieve $1.5 EPS in 2008, up from about $1 in 2007. This tells me SWIR is trading at 13 times forward earnings while I expect these to keep growing at a 50% CAGR over the next five years, which is an extremely attractive valuation.

I'll hold SWIR until the market recognizes my view of the fundamentals or until I'm proven wrong by the incoming data.

[buddjas1]

This is a good stock. I am on the sidelines just waiting for the down trend to settle down, before I buy.  I cannot explain the downswing.  Double bottom at $17.50?

[wxmang]

Man, this is rediculous!
The hit today was because of "ERIC" :-(

[buddjas1]

What is "ERIC"?

[JKN]

I think he means Ericcson...

[wxmang]

Yeah, Ericcson.. Sorry about that..

Hey Garoh, are you closing your SWIR trade?

[Garoh]

Yeah, Ericcson.. Sorry about that..

Hey Garoh, are you closing your SWIR trade?

Hi wxmang 
As I said closing below 18.90 is too bad , but there's still some hope on weekly we can wait to see if it doesn't close below 17.70 ...

But in general I see a too bad chart on both daily and weekly ..
I'm not recommanding anyone to sell ... I'll include a chart to show why I think it's going down , I might  be wrong anyway ...

Again this could be wrong , just my thoughts 

[wxmang]

Thanks Garoh for replying but I have to disagree with that "target"
Good God Man!
That is absurd!
There are three Institutions that paid for SWIR's shares at $22.40!!!

Listen to me on this:

I was just comparing all of 2006 Earnings on SWIR to all of 2007 earnings.

In all of 2006, SWIR earned $0.42 and the stock price was around $14 around by Christmas 2006.

Now, SWIR is expected to earn $1.01+ for all of 2007.

If we use a simple ratio like this:
$14/$0.42 = X/$1.01

X=$33.66 (X=What SWIR should be at by Christmas 2007.)
This a very conservative target too!

In my opinion the analysts are right on the mark here with a $32 price target!

Anyone care to comment?

Thanks!

[wxmang]

From the Yahoo Board:

"In Lehman's morning summary yesterday, they had a $32 price target on SWIR with $1.06 EPS for 07 and $1.31 for 08.

They also say, "Our checks suggest solid core biz led by demand for USB modems at Verizon and ATT. Sprint may provide upside." And that they also expect a solid market and HSUPA intros to drive results above consensus. They finish with "view valuation compelling.""

Does this sound like a $18 stock?

[wxmang]

David,

Does this at all worry you owning SWIR especially through earnings?:


"Ericsson Tumbles After Cuts to Forecasts"

"Some analysts said market-leader Ericsson's difficulties in forecasting its business and the order delays may point to broader weakness in the industry. Ericsson's weakness "amplifies the problems in the sector," said Thomas Langer, an analyst at West LB in Düsseldorf, Germany."


http://online.wsj.com/article/SB119251511737860388.html?mod=yahoo_hs


It appears that Ericsson is a competitor to SWIR:
http://www.wireless.att.com/businesscenter/solutions/wireless-laptop/laptop-connect-devices.jsp

[David Randolph]

Hi wxmang, thanks for your posts

I wonder if instead of holding SWIR's shares, you're holding call options instead? Or if you have too much weight of your portfolio allocated to SWIR?

I see you quite anxious about the short term outlook for SWIR. You're under pressure here.

You know that my hands are strong not just because I study and trust the fundamentals of the stocks I own, but also because of the money management rules I always obey and have kept me out of trouble, mainly:

1) Never average up or down on any investment;
2) Always buy a fixed portion of capital in each different holding, in the Main's case, 6.66%, which means I always need 15 different holdings to be full invested, diversifying risk.

I wish you get away with your overexposure to SWIR, but remember this lesson for the future anyway. It is easy to know what needs to be done in order to have appropriate risk in a stock's portfolio, but actually doing it is a whole different and much harder task.

Anyway, I enjoy your posts and interest on SWIR

As for ERIC, I think it is different from SWIR. I don't see it as a major competitor to SWIR. Perhaps it has some products in a similar area, but not quite the same thing as SWIR's products.

The stock has broken down below the 200 days SMA and the gap level at $19.13. Technically it is very hard, almost impossible, to defend it. Fundamentally you said it all, the stock is growing a lot and it is trading at a low earnings multiple.

I believe anyone looking at what is happening in the real world knows SWIR's products are in high demand and that will grow even more. What I've wrote today in NVTL's thread equally applies to SWIR, the only difference being that SWIR is cheaper.

Because I currently have just 4.6% of capital invested in SWIR I'm able to go through the short term storm and keep focusing and holding the stock for the long term. But I understand that some of you folks have more exposure and that always brings more anxiety.

The stock will open higher today, after two days of strong volume. I hope the bottom was made and SWIR trends higher from here. Fundamentally, it should.

[wxmang]

"I wonder if instead of holding SWIR's shares, you're holding call options instead? Or if you have too much weight of your portfolio allocated to SWIR?"
Damn straight I do!
The risk here is 10% down if they come in-line with earnings.
The upside is 50%+  due to my ratio in the previous post...

This article came out today that will solidify my Risk Taking:

"Explaining Sierra's selloff"

"The recent selloff in Sierra Wireless Inc. represents a buying opportunity as the "underlying fundamentals [are] strong and the valuation compelling," suggests Scotia Capital's Gus Papageorgiou.
He explains that a trading relationship between Sierra and rival Novatel Wireless Inc. recently broke down because of rumours that Sprint is preparing to eliminate Sierra from its retail channel, a Novatel upgrade and overhang from a Sierra equity issue.
"None of these reasons really threatens the core investment hypothesis in Sierra, nor diminishes ... the company's competitive position," he writes.
While LM Ericsson this week warned of a less robust roll-out of third generation (3G) wireless networks in the U.S., "many investors may be concerned that this will impact Sierra," Mr. Papageorgiou reasons.
"Certainly it will have some impact, but ... we believe AT&T will continue to aggressively market Sierra's products, because these data cards are the only real 3G application available and the carriers need them to help capitalize on their 3G investments," he writes.
He rates Sierra "outperform," with a $31 price target. The stock has gained 1 per cent to $18.30 on the TSX Wednesday afternoon."
http://www.theglobeandmail.com/servlet/story/RTGAM.20071017.WBmarkets20071017132200/WBStory/WBmarkets

Do you guys realize how many commercials I see all day long for Sierra's products?
AT&T is pushing it harder than any product I have seen on the "boob tube" this year!

And look at the diversity of Sierra's product's:
http://www.wireless.att.com/businesscenter/solutions/wireless-laptop/laptop-connect-devices.jsp
5 To 1 on Novatel!

"It is easy to know what needs to be done in order to have appropriate risk in a stock's portfolio, but actually doing it is a whole different and much harder task."
SO TRUE!!! Thanks David :-)

[David Randolph]

Thanks for the valuable information wxmang

Those are plausible reasons to explain SWIR's decline, and I also agree with the conclusion that bears are losing sight of SWIR's long term fundamental story, which is quite attractive.

The market responded very well yesterday, with an 8.5% advance. I guess the bottom was made and SWIR is now free to continue its long term trend, which is up, reflecting the fundamental improvement and the cheap valuation.

I'll continue holding SWIR for the long term.

[wxmang]

I just received my AT&T Entertainment & Communication Fall Catalog...
You know I have been pounding the table about all the AT&T Commercials with the Wireless Laptop Connect Card?
"Found It"
"In a Pond"
"In A tree"
I am going nuts with these commercials!#%$^
Ok...
So I flip through the catalog and there IS NOT one Novatel Wireless or Ericsson ADVERTISEMENT!

The only company I see is Sierra Wireless!
http://www.2and2.net/files/47183f00664b5.jpg

I truly believe SWIR is going to blow the doors off of Q3 and Q4!

AT&T has spent sooooo much money pushing Sierra's Products..

Novatel is no where to be found in this Catalog folks!

I just can't get out of my mind how many times I saw Garmin's commercial and Costo's ads with Garmin in them....
After that Garmin Doubled in stock price within a few months...

If you believe in "The Secret" you have to believe in Sierra Wireless :-)

Good Night and High Fives to those Who Still Hold This Winner!