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MagicJack
(CALL)
sold over 365,000 of its new MagicJack Plus devices between November 20th
and December 20th.
They are
estimating 4q sales to come in around 55-60 million units, which would
make for
a very strong quarter. They
also
recently cancelled a secondary stock issue, which tends to be bullish
as
offerings dilute the existing shares.
In
addition, MagicJack also recently announced a share buy-back program.
If
you have an appetite for a more
volatile stock, CALL
may one to
look at. Normally I
would never bring a
stock with low volume like this to the table. But sometimes it doesn’t
hurt to
catch stocks before they become popular. Aside
from the positive sales projections
from the company, consumers these days are gravitating to technology
that
lowers costs such as their MagicJack Plus product.
This could prove to add a positive surprise
to their results at the end of the month.
Volume
is definitely on the low
side, which creates added risk.
Generally it’s a smart idea to scale back investments in
any stock that
trades volume below 500,000 shares per day on average. This stock
certainly
fits that description.
While
the company may be a one trick
pony, investors seem to be riding this horse as of late, with momentum
looking
to continue into the earnings coming in late February-March (est)
Company
Description
MagicJack
VocalTec Ltd. is a
provider of carrier-class voice over Internet protocol (VoIP) and
convergence
solutions for fixed and wireless communication service providers. They
are the
makers of MagicJack and MagicJack Plus, which you may have seen
advertised on
TV.
Their
latest product is a hit with
both consumers and with investors in the stock. Shares have been
trending
higher for the past five months after consolidating around the
$9.50-$10.00
level in late July, early August.
Financial
Profile
& Earnings
MagicJack
is trading at about 37
times earnings, with a forward p/e projection of 13.34 as sales are
expected to
grow. Last quarter,
they generated 3.91
million in income and earned .17 per share.
Last quarter’s earnings surprised estimates by 13.33%. They are expected to lose
.09 cents this
quarter, but swing
back to strong
earnings per share growth over the next year.
MagicJack
ended the quarter with assets
of $114 million against total liabilities of $106 million.
The
financials are certainly not
perfect, but with strong sales, supportive news and updates as well as
a strong
technical channel, CALL
qualifies
as a momentum stock and could see further upside.
Estimates
We
did see a little bit of movement
in estimates off the good quarter, with the current year adding 4 cents
in the
last few months to $1.64. The next-year estimate is up 3 cents in the
same time
to $1.83, a solid 12% growth projection.
Market
Performance
Over
the past 12 weeks, CALL
has exceeded the S&P 500’s
performance by 16% with a price jump of over 21%.
With a Beta of .99, it tends to be closely correlated
with the market. The
fact that this
stock has been breaking out of this correlation trend is a bullish sign
and
perhaps proves that smart money may be moving into CALL.
12-Month
Chart
On
the chart, shares have been
rallying since rallying since August after bottoming out during the
market
downturn and before the release of their latest product. The stock is no doubt
volatile, but for those
with an appetite for a little more risk, look for support around the 50
and 200
day moving averages of $12.20 and $11.20 respectively.
Jared
A Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
market-beating
Zacks
Whisper Trader Service.
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