Trends, Charts and Exclusive Opinion
Three SmallCaps in Transition
DRWI: Will Buyback 10% of Shares in the Public Float
LAVA: San Jose-Based Chip Designer Strengthens Magma KK
VISN: After a $3 March Drop; a ‘Buy on the Dips’ Proposition
First up this morning is DragonWave Inc., (DRWI) http://www.dragonwaveinc.com/ currently trading in $10.28 range on nearly a million shares traded a day. DRWI was trading under $2 a year and has staged a 10-Month rally tipping out at the $14 level in Jan. DRWI has drifted down in the last 8-weeks, but there is support at this range. DRWI has a 52-week high of $14.10 set on 01-19-10 with current trailing twelve month revenues of $118+ million and a strong, positive corresponding diluted EPS of +$0.45. I believe DRWI can regain its high in the short-term (6 Mo) and the stock is a ‘Buy’ consideration for me.
Last week DRWI made a show of strength at both the Toronto Exchange (TSX) and the NASDAQ when it announced it would like to acquire up to 3,508,121 of its common shares representing approximately 10% of its public float, through the facilities of the TSX and the NASDAQ subject to applicable securities laws. As of March 31, 2010, DRWI had 36,934,917 common shares issued and outstanding of which 35,081,214 constituted its public float. DRWI, because of the normal 25% block restrictions on both exchanges, will repurchase the over a period of time in different installments. DRWI makes and sells carrier-grade microwave radio frequency networking equipment or links that wirelessly transmit broadband voice, video, and other data between two points.
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Next up this morning is Magma Design Automation Inc. (LAVA) http://www.magma-da.com/ currently trading in the $3 range on a 3-Month average daily trading volume of 394,432 shares. LAVA was trading under a $1 a year ago, jumped over $2 in early-May, set up a 3-Month floor at $1.50, and then took off in Oct of 09 into the $2.50 level. LAVA, with a few small spikes and dips, rallied this month into the $3 level. LAVA has a 52-week high of $3.04 set on 04-09-10 and current trailing twelve month revenues of $123+ million. Considering the steadiness of the Company’s past year, its innovation, and the string return of the semiconductor sector, at this price, LAVA is a short-term (6 Mo) ‘Buy’ consideration for me.
Yesterday, yes on a Sunday, LAVA management announced it has named Noriaki Kikuchi president of Magma KK, LAVA’s Japanese subsidiary. Kikuchi, with more than 30 years experience in electronic design automation and other technology industries will report to LAVA CEO Roy E. Jewell. “I'm delighted to join such an innovative and forward-thinking company as Magma,” Kikuchi said. “Magma technology is well regarded in Japan, the new Tekton static timing analysis platform has been met with great enthusiasm, and I believe the company's commitment to making customers successful will continue to be key to attaining even greater accomplishments.” LAVA software enables chip designers to reduce the time it takes to design and produce integrated circuits used in the communications, computing, consumer electronics, networking, and semiconductor industries.
Finally this morning is VisionChina Media Inc., (VISN) http://www.visionchina.cn/ currently trading in $4.91 range on a million shares traded daily. VISN had a $5-$6 floor for most of 09 and then spiked to $10 a share in Oct of 09. VISN again spiked in Dec of 09 to the $12 range. VISN dropped in Jan-Feb 2010 to the $8 level and began March with a $3 plummet. It spent the rest of the month trading a little under $5. VISN has a 52-week high of $12.27 set on 12-16-09 with current trailing twelve month revenues of $120+ million and a positive, corresponding diluted EPS of +$0.37.
VISN operates an out-of-home advertising network using real-time mobile digital television broadcasts to deliver content and advertising on mass transportation systems. Its mobile digital television advertising network delivers real-time content provided by local television stations. As of Dec 08 VISN’s mobile digital television advertising network and stationary advertising platform covered 17 cities in China and consisted of approximately 66,264 digital displays.
The March plummet came about because VISN predicted first-quarter revenue of at least $22 million, which is far lower than the $38.4 million analysts polled by Thomson Reuters were looking for. VISN management noted it expects several factors will hamper revenue, including a sales force restructuring and the integration of subway advertising company Digital Media Group, which it recently bought. VISN reported Q4 earnings of $5.6 million or 8 cents per share vs. $14.8 million or 20 cents per share, in the year-ago quarter. VISN is a ‘Buy on the Dips’ consideration for me. VISN is approximately $7 off its high.
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