Money
& Investing 
How to Dial into Top Wireless Plays -- a Look at Ceragon and Wavecom
I was in church one Sunday, and guess what I heard?
No, not angels singing -- I heard the musical tones of cell phones ringing. It seems that, today, everyone is wired in one way or another.
A savvy investor may think that one of the strongest sectors of the stock market to invest in would be telecom and, especially, the wireless group. That person would be right!
The question is how to go about it. Here is one approach.
eSignal’s Power Scan is a good tool to get a look at where the big money is moving everyday. You can scan for dollar volume leaders, which are stocks whose price times volume shows the amount of dollar volume traded. These are often big-cap issues -- the kind that would interest big institutional money.
I scanned for “dollar volume” on June 15. It showed big money going into three wireless plays: Apple Inc. (AAPL), Qualcomm Inc. (QCOM) and Research in Motion Inc. (RIMM). (See the accompanying screen shots.)
Apple showed dollar volume of 3.3 billion dollars and closed up 1.75 to 120.50 for the day.
Apple, of course, came out with its iPhone on June 29. The gadget has the telephone, iPod and Internet features. It is offered as two models: One for 500 dollars with 5 gigabytes of storage and the other for 600 dollars with 8 gigabytes. This year, Apple’s stock has climbed from 85 to 120.50 -- a gain of 42 percent in anticipated profits from the iPhone.
Qualcomm showed dollar volume of 1.2 billion dollars on June 15. The stock closed up one cent to 42.63. The company develops wireless chipset solutions. It has patent license agreements with 135 telecom equipment makers. Since 2003, the stock has climbed from 18 to 42.
Research in Motion showed dollar volume of 850 million. The stock jumped 2.58 to 173.75 on June 15. Since 2003, the stock has skyrocketed from 7 to 173.75, a sensational 24-fold move. (See the subsequent chart.)
The Canadian firm makes BlackBerry devices for wireless communications. It provides a phone service, email, web browsing, GPS and several other features. Research in Motion’s net this fiscal year ending February 2008 should surge 42 percent.
These three big-cap plays cover three areas in the wireless sector. Apple competes with Microsoft Corp. (MSFT), Hewlett Packard (HPQ) and now Nokia (NOK) and Motorola (MOT).
Qualcomm’s competition is mostly in the semiconductor area against firms such as Broadcom Corp. (BRCM) and Texas Instruments Inc. (TXN). Research in Motion is up against hand-held producers such as Motorola, Nokia and, now, even Apple.
Obviously, Apple, Qualcomm and Research in Motion are big-cap plays. They could continue to do well. However, eSignal subscribers should be on the lookout for other dynamic plays in the wireless sector. To do this, you should look for stocks in the group that:
- Are making new highs
- Have a strong earnings outlook
- Have a new, dynamic product or service
You can check the eSignal Market Scanner for new highs, and you can also enter the industry group into the screen. This will give you a fast way to spot potential new plays in the wireless or telecom sector. It’s a great tool.
For instance, a recent eSignal scan came up with Ceragon Networks Inc. (CRNT) making a new high at 10.88. (See the subsequent screen shots.) The company is a provider of high-capacity wireless backhaul solutions for cellular and fixed wireless operators.
A further check shows this small-cap Israeli stock with annual sales of 74 million dollars. It should show a 118 percent jump in profits this year to 41 cents a share from 19 cents a year ago. Next year, net should rise 34 percent to 56 cents a share.
Analysts say the firm’s FibeAir product family is a top product for backhaul transmission and is also one of the top solutions chosen by cellular operators for Sonet / SDH protocols. Ceragon’s sales for the first quarter climbed 59 percent.
Another stock that is doing well in the wireless sector is Wavecom S.A. of France (WVCM) with annual sales of 250 million dollars. The stock soared from 10 to 34 the past 12 months. Profits should leap 531 percent this year and 41 percent next year. It provides integrated wireless solutions.
Every bull market has certain hot sectors. For this one, wireless is one of those sectors. So, eSignal subscribers should constantly be on the lookout for good plays in that group.
Mr. Fasciocco’s articles appear at www.tickertapedigest.com. He is a contributing writer for several national publications. He is also president of Corona Investment Management.
Mr. Fasciocco can be reached at leo2@tickertapedigest.com
