AVNX

[David Randolph]

I don't have to dig further about ANVX than I did at the 30 minutes look to know that I must buy this stock for the 3 Stocks on Fire Portfolio:

«The President and CEO of Avanex (AVNX), bought 150,000 shares at the open market on Thursday. Now he holds 205,000 shares, so this buying was pretty significant.

Also, a number of directors and others at the company exercised stock options to buy shares last week. The co-ordinated action from insiders, buying shares of their own company, is a bullish factor. It can be positive news coming, better times ahead, we don't know, but there's no doubt insiders buy because they believe (or they know), the share price will increase, right? (as everybody else, but in principle they know more about the company than the average investor).

Volume has increased significantly over the last couple of weeks, as did the share price:



The company is in an industry that has been hot lately, the semiconductor - integrated circuits. All of its competitors have attractive charts. Here's a direct competitors comparison:



The fact that the whole industry is rising is a plus for this pick.

Reading the last quarterly earnings report from the company I see that fundamentals are improving, in fact the 3rd quarter was the best quarter in more than 2 years for AVNX (and the stock price is 80% below what it was 2 years ago).

As guidance for the 4th quarter of the current year (for the company it is the 2nd quarter of 2006, never understood why the fiscal year isn't always the same as the calendar year) the company says the following:

«Revenue is expected to be in the range of $41 million to $45 million in the fiscal second quarter. Gross margins are expected to increase to be more than 10 percent.»

Gross margins are growing from 0% in the second quarter, to 5% in third quarter, to more than 10% expected for the 4th quarter. That's a big development and achievement. The fact that the CEO and other insiders are buying shares now tells me the company will deliver strong results for the 4th quarter.

I believe AVNX is attractive at this point.

»

I'll buy AVNX around the open, 6.66% of trading capital, as always.

[David Randolph]

Spectacular breakout on AVNX, with 10 million plus shares traded. My business with this stock is to let the profits run.

[David Randolph]

AVNX came down a bit on profit taking. I continue to feel that the reasons I gave for this purchase will propell AVNX further to the upside.

Yesterday was FNSR's day. Today might me JDSU's or AVNX's. The whole industry is rising on improving fundamentals, I don't expect this trend to stop before January 2006.

[David Randolph]

There was a big sell off on AVNX yesterday, I really don't know why, I guess the stock just rose too much over the last couple of weeks.

But remember, the President and CEO of the company bought 150,000 shares just beneath this level (prices between $0.87 and $0.93), and it were almost his first shares of AVNX. Possibly traders, when were crazy selling this, remembered that too, because the stock recovered a bit (well, about 5%), to close at $1.04.

Nothing has changed, I'll continue holding AVNX.

[David Randolph]

AVNX recovered almost all of its losses yesterday. We got a bullish chart pattern at this point. The whole Semiconductor - Integrated Circuits industry is rising and AVNX looks to be undervalued against its peers.

I'll continue holding it without reserves.

[Terliso]

In my opinion, AVNX could go to $1.50
That will be nice profit for you David.... let me guess ummm.. 13,700 shares?

[David Randolph]

In my opinion, AVNX could go to $1.50
That will be nice profit for you David.... let me guess ummm.. 13,700 shares?

Lol, I have a little more than that, 17,000 shares. But I never count money 

I think there are two things moving AVNX at this moment:

- Insider buying and;
- «Q2 FY 2006 Outlook

Revenue is expected to be in the range of $41 million to $45 million in the fiscal second quarter. Gross margins are expected to increase to be more than 10 percent.»

Let's see how significant is this gross margin improvement:



From 2003 and 2004 this is an important fundamental shift. And in 2003 and 2004 AVNX was trading between $3 and $4. If operating expenses stay basically the same the company will lose about 9 cents over the next quarter. Let's see the EPS trend for AVNX:



(Results for the last 2 quarters are annualized)

It sure looks like AVNX is on the path to profitability.

If we make a direct comparison between AVNX and its competitors we see that none of them is making money:



I'll continue holding AVNX, maybe for the long term, I need to see some more of it.

[David Randolph]

AVNX came down a bit with the general market yesterday. I considered selling, since I fear the stock may go down as the Nasdaq goes down.

But, I read the complete thread and I believe my fundamental reasoning is sound. AVNX seems to have more upside potential, even in the face of a falling market.

Therefore I'll continue holding AVNX for some more time, with the hope that it breaks $1.20 on the upside.

[Terliso]

Just like this one AVNX.. it crossed over 0.20 level then shoots up above 0.80, profit taking in AVNX is just waiting around the corner  

http://www.3stocksonfire.org/trading/index.php?topic=1892.0

Looks like AVNX is going down to meet the 13 Day EMA before going for another ride .. some investors need to take profit from the table.... Remember this was only 60-70 cents range couple of weeks ago...StochRSI is going down that should be a nice entry point again

[David Randolph]

I agree Terlisa 

But, I still believe insiders will support the stock on any fall below $1, so the risk is on the upside. Since we're expecting positive news for the 4th quarter, I think I can continue holding AVNX, even though I feel the general market turning bearish as we speak.

Perhaps I'll take a short position in one of AVNX's competitors to hedge this position in the near future, but not today.

[ScottishTrader]

looks like we may get that breakout tomorrow - a very solid push at the end of the day, closing strong at 1.21, with a high just before that of 1.22.

Formed a small ascending triangle after the initial big move which I think represents the consolidation phase  - the target of this triangle would be at 1.41 (range .99-1.20) which may be a good short term target, although there may also be resistance around 1.37.  Who knows, Terlisa could be right and it could break up to test the gap at 1.53

Personally I am trying to get my portfolio to a position where it is manageable over Christmas and New Year when I may not be able to check it very much - any suggestions on how to do this if you are not able to check it every day?  But for now AVNX has got to be a keeper   May even give us a nice Christmas present tomorrow - will see.

[David Randolph]

Personally I am trying to get my portfolio to a position where it is manageable over Christmas and New Year when I may not be able to check it very much - any suggestions on how to do this if you are not able to check it every day?  But for now AVNX has got to be a keeper Wink  May even give us a nice Christmas present tomorrow - will see.

I have a suggestion for that: make a trading plan based on closing prices and just check quotes each day before the close.

I agree with you, AVNX did close above $1.20, and that's quite bullish for the short term. Technicals and fundamentals are improving as we speak, evidence of that will be news when they issue this quarter's earnings report.

I'm thinking of holding the stock until the earnings release date.

[setravis]

Wouldn't you know it, just when I take my eyes off it. Look what all takes place.
Very nice call and play David.....Lot's of Applaud !!
Wow...The only other thing I can say is.....Merry Christmas....$$$$$$......and a Happy New Year!!!!
Technicals
Most Actives
Percentage Gainer

Last Price Quote is:
25.50%above 13-day EMA
50.46%above 50-day EMA
RS Rating: 97 

[shawFund]

I bought it today at break-out.

Hope that it will keep up next week.

Be very careful, not let the profit slipped away.

[Terliso]

AVNX