Picking a new stock after the biggest rally in four months is not an easy task. With the Dow up more than 300 points, S&P over 32 and Nasdaq over 78 points, every stock worth owning has gapped higher and inflated the option premiums. The stocks that did not gap higher today we do not want to own for obvious reasons. If they are not moving higher in today's market they are probably not going to be winners as this short squeeze bleeds off. I went with SWIR because of their strong earnings and guidance and exposure to the IoT.
NEW BULLISH Plays
SWIR - Sierra Wireless - Company Profile
Sierra Wireless, Inc. provides wireless wide area modem solutions for the mobile computing, rugged mobile, and machine-to-machine (M2M) markets. It develops and markets wireless modems for mobile computers; embedded modules for original equipment manufacturers (OEMs); and fixed and mobile wireless data solutions for industrial, commercial, and public safety applications. The company's products and solutions connect people, their mobile computers, and fixed terminals to wireless voice and mobile broadband networks. Its mobile computing products are used by businesses, consumers, and government organizations to enable high speed wireless access to a range of applications, including the Internet, e-mail, corporate intranet, remote databases, and corporate applications; and rugged mobile and M2M products are primarily used in the public safety, energy, industrial, transportation, and transaction processing markets. The company also provides various product development and integration support services, which include software and hardware integration, platform RF testing and optimization, regulatory approvals, mobile operator certification, project management, and sales and technical support training. Company description from FinViz.com.
Sierra guided for Q4 earnings of 13-19 cents and revenue of $157 million. They reported earnings of 27 cents on revenue of $163 million. Revenue from OEM solutions rose 11.2% and Enterprise solutions +27.1%. Gross margin was 34.3%. They guided for Q1 revenue from $152-$161 million representing up to 12.7% growth. They projected earnings of 13-20 cents. Analysts were expecting $154.8 million and 12 cents.
Earnings may 11th.
The company is very strong in the IoT and just won the fastest connected car contract with Volkswagen. The car company will be using Sierra's modems to connect the cars to the cloud through its Car-Net platform. The connected car market is expected to grow 31% annually through 2020 and be worth $41 billion a year.
They have a 33% market share in the machine to machine (M2M) market. They recently announced a new wide area WiFi technology to allow IoT devices to be plug and play.
The company has a lot going for it and they beat their own guidance significantly last quarter.
Buy SWIR shares, currently $29, initial stop loss $26.75.
No options recommended because of price and spreads.
NEW BEARISH Plays
No New Bearish Plays