Category Archives: nasdaq

Quietly, Telecom System Builders Emerge As Leaders

While makers and sellers of smartphones and tablet PCs are glamour brands, some of the companies that make the equipment to make those devices work are quietly turning into attractive investment choices. The telecom infrastructure industry group remains in the bottom half of IBD’s rankings, yet it’s made a rapid advance over the past few weeks as its leaders shape attractive charts. The group ranked No. 107 in IBD Weekly, up from 147 four weeks ago. Three top-rated stocks in the group are of particular interest because they have topped or are approaching buy points. The most critical to watch now is Broadsoft ( BSFT ), which rose above the 42.16 buy point of a base-on-base pattern Monday in active trading. For the stock, it’s been an impressive rebound after the May 2 earnings announcement rattled shares. Although it beat profit expectations, Broadsoft projected its current-quarter operating EPS below views . Shares fell as much as 11% on the news, but they quickly recovered and continued working on the base until Monday’s breakout. The company helps big telecoms deliver unified communications, integrating voice, video and text messaging and other forms into a single stream. Dycom ( DY ), which is on the IBD 50 , is trying to break out past a 73.28 buy point. With the earnings report due Tuesday after the close, it could be the next telecom infrastructure stock to make a move. Analysts expect Dycom to earn 74 cents a share and to report sales of $597.8 million. Dycom has a nearly perfect EPS Rating of 98. In a report Monday from D.A. Davidson, the research firm said, “ AT&T ( T ), Verizon Communications ( VZ ) and other presumed Dycom customers have announced plans for ongoing major fiber expansion, suggesting near-term growth in wireline construction activity will continue to be robust.” Those same trends figure to aid other telecom infrastructure companies. Indeed, capital spending by the major telecoms drives much of the infrastructure industry’s fortunes. CommScope Holding ( COMM ) is forming a cup-with-handle base with a buy point at 31.80. The Hickory, N.C.-based company helps telecoms design, build and maintain wired and wireless networks. Ubiquiti Networks ( UBNT ) broke out of a base May 6 after it reported earnings. Ubiquiti, which builds wireless networks around the world, beat estimates. Earnings and sales growth have accelerated the past few quarters, following a slump in the first half of 2015 that saw EPS and sales decline. The stock is in buy range from the 37.20 buy point.

Apple Shakes Off Concerns About Becoming The Next BlackBerry

Apple ( AAPL ) stock rose Monday as investors digested a positive iPhone 7 production report, along with a cautionary article that suggested Apple was at risk of becoming the next BlackBerry ( BBRY ). Apple stock was up 1.6%, near 97, in afternoon trading on the stock market today . Taiwan’s Economic Daily News reported Monday that Apple has ordered contract manufacturers to produce 72 million to 78 million iPhone 7 handsets this year, a record figure for a new iPhone and above analyst estimates of 65 million units. The iPhone 7 is expected to be released in September, with a slimmer design, faster processor and improved camera as compared to earlier iPhones. This 10th-generation iPhone might even sport a waterproof design for the first time. Apple Falling Behind In AI Meanwhile, influential tech blogger and Web developer Marco Arment on Saturday posted an article that argued Apple is falling behind Amazon.com ( AMZN ), Facebook ( FB ) and Alphabet ( GOOGL )-owned Google in artificial intelligence (AI), digital assistants and voice interfaces. He said Apple could miss the next big shift in computing, just as onetime cellphone giant BlackBerry missed the move to smartphones from email-centric feature phones. “Amazon, Facebook, and Google — especially Google — have all invested heavily in Big Data Web services and AI for many years, prioritizing them highly, iterating and advancing them constantly, accumulating relevant data, developing effective algorithms and attracting, developing and retaining tons of specialized talent,” Arment wrote. Arment says Apple is not putting the same emphasis on Big Data and AI as its rivals. “Becoming a major Big Data AI services company doesn’t happen completely in secret and suddenly get released to the world, completed, in a keynote,” Arment said. “It’s a massive undertaking, spanning many years, many people and a lot of noticeable interaction with the world. It’s easier to conceal the development of an entire car than a major presence in AI and services.” Analysts Keep Buy Ratings On Apple Stock Investors on Monday were more focused on the Economic Daily News article and a trio of reassuring analyst reports. Pacific Crest Securities analyst Andy Hargreaves on Sunday reiterated his overweight rating on Apple stock with a price target of 123. “We believe concerns about a potential lack of innovation in the iPhone 7 underestimate the extraordinary growth in the user base over the past two years, which is likely to drive increased replacement volume and overall iPhone unit growth in fiscal 2017, almost regardless of the hardware,” Hargreaves said. BMO Capital Markets analyst Tim Long also is positive on Apple because of the potential for iPhone users to upgrade with the iPhone 7 cycle. “What we find most interesting is that we believe we are entering the iPhone 7 cycle with the highest percentage of phones in the installed base at least two years old, at about 26% (compared to 23% for iPhone 6),” Long said. “This translates to about 120 million phones. As a result, we believe the device will drive an improved replacement rate, even if it has lackluster features.” Also, the huge growth in used iPhone sales will increase the installed base of iPhone users and boost services revenue, Long said. He reiterated his outperform rating on Apple stock, with a price target of 117. Nomura analyst Jeffrey Kvaal maintained his buy rating on Apple with a price target of 120. He noted the success of Apple’s recent iPhone SE launch but cautioned that the lower-cost smartphone could cannibalize sales of iPhone 6S handsets. Apple chip suppliers Broadcom ( AVGO ), Skyworks Solutions ( SWKS ), Qorvo ( QRVO ) and NXP Semiconductors ( NXPI ) were up Monday intraday. Broadcom climbed 1.5%, Skyworks 2.4%, Qorvo 2.9% and NXP Semi 1.1%. RELATED: Apple Has Largest Cash Stockpile, Twice That Of Microsoft’s Apple Faces ‘Existential Threat’ From Messenger Bots .

Will Amazon’s Transportation Fleet Bring Down Hammer On FedEx, UPS?

It’s an ambitious plan by Amazon ( AMZN ), to procure a fleet of 40 airline freighters and lessen its dependence on FedEx ( FDX ) and United Parcel Service ( UPS ). The 40 aircraft that Amazon plans to have fully operational by 2018 will enable it to bring as much as 30% of its current delivery volume in-house, according to a research report Monday by Moody’s Investors Service analyst Jonathan Root. In terms of short- and medium-haul aircraft, Amazon’s fleet would be 21% the size of UPS’ and 14% the size of FedEx’s, says Root. In terms of payload capacity, Amazon’s fleet would be 26% the size of UPS’ and 17% of FedEx’s, excluding their largest freighters that fly mostly long-haul routes for those companies, Root wrote. “As significant as that sounds, the business that UPS and FedEx will lose may not be as bad as it sounds,” Root wrote. “Revenue and average daily volumes at UPS and FedEx will be hurt, but there’s plenty of opportunity for them to replace that lost business with growing volumes from higher-yielding customers” and growth in e-commerce. Root also says that Amazon is one of the least profitable customers for UPS and FedEx, because Amazon’s size enables it to negotiate considerable discounts. “The extent to which UPS and FedEx can offset volume declines from Amazon with new business from other customers will determine how beneficial or detrimental Amazon’s plan will be to the companies’ segment operating margins,” Root wrote. Amazon stock was down a fraction, near 700, in afternoon trading in the stock market today , after touching a record high above 722 on May 12. It’s an IBD Leaderboard stock. UPS stock was down a fraction, while FedEx was up a fraction. The threat would grow if other large retailers follow Amazon’s lead, which he says is possible. “We understand that Wal-Mart Stores ( WMT ) is investing to improve its e-commerce positioning by building eight e-commerce warehouses,” Root wrote. Wal-Mart already offers free shipping on orders of more than $50, and it might broadly offer an e-commerce membership that includes free shipping, as Amazon does with its Amazon Prime membership service. Still, it’s not clear how deeply Amazon will dive into transportation services. “We estimate that Amazon could build a competing U.S. ground network for between $8 billion and $15 billion,” Root wrote. “We believe the company has the financial capacity to continue adding fulfillment centers, pickup locations and local and regional delivery operations, it if chooses to do so.” More than that, Amazon could offer its delivery services to the many third-party sellers on its site. “Such an offering would be more problematic for UPS’ and FedEx’s longer-term financial performance,” Root wrote.