Skip to main content

Interactive Intelligence - a smart investment?

Looking for a tech stock with a strong BUY rating?

Tuesay night Alert HQ identified a small cap stock that appears poised for a quick gain. Interactive Intelligence (ININ) appeared as a Strong BUY on our list of Swing Trading Signals. The chart follows:


Note how the stock barely touched its 50-day moving average on an intra-day basis and is now bouncing up off its lower Bollinger Band. You can see the strong reaction of the Williams %R indicator as it moves steeply up from an over-sold value. In addition, that 50-day MA is heading nicely upward while the stock has already regained its 20-day MA.

So technically the stock was a good trade today, gaining 3.86%, and showing a potential for a good 5% or 6% more over the next few days and perhaps more over the longer term as long as the overall market doesn't plunge.

What about the fundamentals?

Interactive Intelligence is a small cap stock that is involved in IP telephony. The buzz word best describing the company's business is "unified communication." This is something that Cisco Systems, for example, is also pursuing. Essentially, it means an integration of real-time communication services such as instant messaging (chat), presence information, IP telephony, video conferencing, call control and speech control with non real-time communication services such as unified messaging (integrated voicemail, e-mail, SMS and fax). Interactive Intelligence packages these services for small and mid-sized businesses.

The most recent quarter's results were reasonably good with revenues increasing 7.5% y-o-y and EPS of $0.12 versus only $0.04 in the year ago quarter. The following chart provides a snapshot of the income statement:

Explore more ININ Data on Wikinvest


And this next chart shows that the company is doing very well with respect to cash flow lately:

Explore more ININ Data on Wikinvest


It is noteworthy that the company was able to show growth in the current difficult economic environment; however, this is by no means a cheap company. As an investor you are going to have to pay for the growth this company may offer. It has a sky-high trailing PE of 53, a forward PE of 20 (not too bad), a PEG of 1.28 (kind of high for a value investor), price-to-sales of nearly 2.25 and price-to-book over 5.

Nevertheless, with these kinds of stocks growth is the name of the game and Interactive Intelligence just might be able to deliver.

Disclosure: no position

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…

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.

N…