Skip to main content

Pick 'o the Month - a two'fer

Usually I focus on a single smaller, more obscure stock. In this case, I would like to submit two stocks, a large-cap, Cisco Systems (CSCO), and a small-cap, Big Band Networks (BBND). These two stocks embody a resurgence in the network infrastructure space. That theme is what ties these two picks together.

With the rising tide of video, music and movies downloaded over the Internet and cable companies offering bundled TV, phone and Internet, we have finally absorbed the glut of network capacity created during the Internet bubble. This deluge of multimedia is changing service providers’ business models, and the ways they manage and develop networks. The focus now is on how to move, manage and monetize content that is richer and more complex than ever before.

In response, as telecommunications companies ramp up newer, faster networks to handle all this traffic, Cisco Systems is a prime beneficiary. As the dominant player in network infrastructure, it has already seen profits begin to increase. The recent market downturn has only served to make the shares more attractive. As a bonus, Cisco's recent acquisitions have provided diversification and revenue streams not directly tied to its core business. Cisco's product offerings, always extensive, now run the gamut from equipment for the home to equipment for the Internet backbone, optical to wireless, hardware to software. If it has to do with digital communication, Cisco is there. The recently announced acquisition of WebEx adds yet another piece to the puzzle. One of Cisco's strengths thus far has been their ability to shrewdly choose acquisition targets and successfully integrate them.

As can be seen in the chart below, the stock has been strong in the last two quarters though it is now enduring some of the same downward pressure the rest of the market has seen. Usually I strictly employ the TradeRadar software to guide my trading but in this case, I am more interested in the market position and fundamentals of the company. Look for CSCO to recover its momentum as I believe the wind is now at their backs.

As a small cap selection, I would like to mention yesterday's IPO, BigBand Networks (BBND). They sit in the sweet spot of convergence around bundled video, voice and data; ie, TV, phone (VOIP) and Internet service. Their customer base includes some of the biggest cable and telecom companies and they are already profitable.

BigBand is an Israeli company based in Redwood, CA. The company’s solutions are designed to process, optimize, and deliver services such as broadband Internet, VoIP, digital broadcast television, HDTV, transport of high quality video, local advertising, VOD, interactive TV and IPTV through any network. Service providers use BigBand Networks’ platforms in efforts to cost-effectively expand revenue-generating offerings of rich content and advanced interactive services.

BigBand has won eight of the top 10 U.S. multi-system operators (MSOs) as customers. They provide a strong platform for video processing and distribution for telco IPTV networks. Outside the U.S., BigBand has made some notable headway in Europe and Latin America and especially in China.

Finally, as cable MSOs start to embrace switched IP video as an architecture that can compete with upcoming telco TV offerings, BigBand will be one of the few vendors in the space with the ability to sell into both sets of network architectures. Look for Cisco to absorb them soon.


KavJack said…
Can't buy BBND in the CNBC million $$ cometition. I got a message saying not valid.

Popular posts from this blog

Running TradeRadar on Windows 7 and Windows 8

Development of the original TradeRadar Stock Inspector software was begun back in the days before Windows 7 and Windows 8 were available.

As these newer versions of Windows have become more popular, we have heard from some users that they are having problems installing and running TradeRadar on their newer PCs.

The good news is that TradeRadar will work just fine on Windows 7 and Windows 8. All you have to do is adjust the Windows Compatibility Settings to ensure TradeRadar runs as intended.

It is recommended that you can apply Compatibility Settings when running the initial installation; however, it is also possible to apply Compatibility Settings after the program has been installed.

Prior to installation
After downloading the install program, go to the folder where you have stored the TradeRadarStkInsp_7_Setup.exe or TradeRadarStkInsp_7_PRO_Setup.exe executable. Right-click on the executable file and select Properties. Click the Compatibility tab. Adjust the Compatibility mode to …

Alert HQ has moved!

End of an era!

This site was started way back in 2006/2007 to showcase my blog posts and the Alert HQ buy signals and sell signals. Alert HQ grew to include other kinds of stock alerts including Swing Signals, Trend Busters, Trend Leaders, Cash Flow Kings and more.

In the meantime, I built a sister site, and I started using some of the same Alert HQ content over there. As a result, I am discontinuing the Alert HQ data here at

The good news, however, is that all the Alert HQ signals and stock screens are still completely free. In addition, the pages have been enhanced so that you can hover over a stock symbol and a small chart will pop up so you can get a quick look at the stock's recent price action. If you click on a symbol it will take you to a page with plenty of financial and technical analysis information (still free!) as well as a larger chart that you can play with in terms of adding or deleting indicators, moving averages, etc.

Click …

Durable Goods report for Sept just so-so but Computer segment is on fire

The Durable Goods advanced report for September 2011 was released on Wednesday.

I like to dig into the Durable Goods report because it can be useful for seeing how tech in aggregate is performing and how the sector may perform in the future. I always focus on two particular measures: shipments and new orders. Let's see how it played out last month.

Shipments -- 

I generally give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. It's similar to earnings reports -- it's good to know but the data is in the past and we're more interested in the future. The following chart shows how September shipments looked for the overall tech sector:

Results for the overall tech sector were a bit weak but take a look at the next chart which tracks the Computers and related products segment:

Results here were actually quite good and, to make things even better, the previous month was revised upward.