NSTC

[eliteG]

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:


Medium-term:


Short-term:


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.

[eliteG]

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.

[eliteG]

update NSTC:

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

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. 

We will hold NSTC unless it closes below 11.64.

[digdug42]

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

[setravis]

Great call Wizard, Great timing !
Applaud the work.

[eliteG]

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

perhaps  thanks for the link dig!

Great call Wizard, Great timing !
Applaud the work.

Thanks Hawkeye 

[eliteG]

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. 

[eliteG]

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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[eliteG]

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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[eliteG]

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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[eliteG]

Expect a strong move up today for NSTC .. finally

It looks that IBD finally read my analysis! 

"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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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

[eliteG]

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 

[usedcasting]

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

[eliteG]

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!

[422fwhp]

Breakout is 12.88 

You heard it here first!   

Another great pic...and I thank you. 


Jody