Skip to main content

Adtran breaking out?

On Tuesday we saw a BUY signal for Adtran (ADTN) on our Swing Signals list. Back on Tuesday, after checking the chart, it looked to me like the stock was looking quite promising but was coming up against some serious resistance.

Now that it's a couple of days later, let's take a look at the chart below and see how things are working out.

 

You can see how the stock fell from around $26 all the way down to $20. You can also see the major resistance indicated by the green-blue horizontal line. As of the close on Tuesday, Adtran was poised just below this line. As of the close today on Thursday the stock has managed push roughly 2% above this resistance line. MACD has also turned bullish now. It looks like the stock is ready to run.

Background --

Adtran is a $1.39 billion networking company whose products support voice, data, video, and Internet communications. They are essentially in competition with companies like Cisco. Adtran sells primarily to large corporate customers and telecom companies.

Financials --

Financially, the company isn't doing too badly. The following chart shows the last five quarters:


Explore more ADTN Data on Wikinvest

The last three quarters show steady improvement. The outlook for tech continues to be favorable and there are no reasons to believe Adtran won't continue to benefit. The growth in gross margins shown on the chart should support further improvement in earnings. The company is cash flow positive and pays a dividend.


Currently however, the stock is not exactly inexpensive. The PEG of 1.88 suggests the stock is reasonably priced and is not cheap.The Price-to-Sales ratio, the trailing PE and forward PE are consistent with this assessment.

Outlook --

Valuation suggests upside could be limited in the near term but the chart looks like the stock might be on a roll. It looks like that dip below the 200-day moving average was just a head fake.

Disclosure: no positions

Comments

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.

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 professional