NEW BULLISH Plays
BroadSoft, Inc. - BSFT - close: 34.79 change: +0.56
Stop Loss: 32.45
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on March -- at $---.--
Listed on March 17, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 286 thousand
New Positions: Yes, see below
Why We Like It:
BSFT is in the technology sector. The stock is outperforming the broader market this year and it's up significantly from its 2014 lows.
According to the company, "BroadSoft is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer Unified Communications over their Internet Protocol networks. The Company's core communications platform enables the delivery of a range of enterprise and consumer calling, messaging and collaboration communication services, including private branch exchanges, video calling, text messaging and converged mobile and fixed-line services."
BSFT has delivered a stomach churning performance since its IPO back in 2010. You can review its performance on the long-term chart below. The stock got off to a slow start but then sprinted from about $9.00 in late 2010 to $55.00 less than six months later. Unfortunately, since the early 2011 peak shares have been nothing but a roller coaster ride of ups and downs (we're talking really, really ugly downs).
It would appear that the tone has changed for BSFT. The company has beaten Wall Street's earnings and revenue estimates the last three quarters in a row. The big rally in early November 2014 was a reaction to its earnings beat with revenues up +27% from a year ago. The prior quarter revenues grew +19%.
The stock rallied big again on February 25th with BSFT reporting Q4 earnings of $0.64 a share, beating estimates by seven cents. Revenues surged +26.5% to $65.8 million. Management offered earnings guidance that was relatively in-line with consensus estimates. However, their revenue guidance was above expectations for both the first quarter and fiscal year 2015.
Don't let the in-line earnings guidance fool you. Wall Street is expecting +78% earnings growth this year.
The rally off its 2014 lows has produced a long-term target of $51.00 on the point & figure chart.
BSFT has been showing relative strength the last couple of weeks. Tonight we are suggesting a trigger to launch small bullish positions at $35.15. I suggest small positions because shares don't have a lot of volume and history would suggest the stock is prone to wild bouts of volatility.
Trigger @ $35.15 *small positions to limit risk*
- Suggested Positions -
Buy BSFT stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the MAY $35 CALL (BSFT150515C35) current ask $2.70
Option Format: symbol-year-month-day-call-strike