American Technology Research has issued a research report going into earnings season called "Our Best Dozen Fundamental Picks." AmTech believes investors already expect a disaster but that the current business climate isn’t as bad as some argue. While the firm believes that many companies will guide expectations lower or will be very cautious, some will continue to outperform their peers. We have broken out the technology companies in an individual piece today and some very brief commentary from AmTech is outlined below.
Concur Technologies, Inc. (NASDAQ: CNQR) was called "Strong Execution and Compelling Product Cycle for T&E Leader"
- value proposition resonates well in a tougher macro environment….Although some analysts may need to trim FY09 estimates, we anticipatesubscription revenue will expand more than 20% Y/Y and we are confidentConcur will generate more than $1.00 in FCF in FY09.
Mercadolibre, Inc. (NASDAQ: MELI) is AmTech’s "Broad Play on Latin American eCommerce with High Profit Growth"
- one of the best open-ended long-term growth stories in all of tech…employment and internal demand appear to remain very strong despiteslowing economic growth throughout the developed world.
McAfee, Inc. (NYSE: MFE) is its data play as "Improving Execution, Share Gains and Ratable Model in Resilient Security Space"
- has among the best fundamentals in large-cap software, posting 26%revenue growth and 25% earnings growth in Q2 on a combination of aresilient security sector, improving sales execution following lastyear’s overhaul and a strong recurring revenue model… The stock isdown more than 30% since early September and at its lowest FPE since2000 (investors who bought it there saw a 5x gain over the next year)and now trades at 12x our CY09 EPS, despite an outlook for mid- tohigh-teens earnings growth, leading us to believe this is an excellentopportunity to build positions.
Monolithic Power Systems Inc. (NASDAQ: MPWR) is its "Best Small-Cap Semi Share Gainer"
- continues to have the best fundamentals in small-cap semiconductorsdespite steep price declines… investors are waiting for confidence toreturn to overall earnings estimates in the sector before returning.
QUALCOMM Inc. (NASDAQ: QCOM) is AmTech’s "Clean Play on 3G Wireless with to 4G Royalties"
- we still see growth potential in 2009 relative to flat overall industryunits…. well-positioned to capitalize on the transition to 3G andsecular growth in wireless data services.
Research In Motion Ltd. (NASDAQ: RIMM) is its "Leading the Biggest Growth Opportunity in Large-Cap Tech"
- enjoys some of the best fundamentals in the tech sector. Wireless dataadoption is still early and at a tipping point. Enterprise applicationsare expanding beyond email and consumer adoption is just beginning….Value investors can look at RIMM for the first time since NTP. Growthinvestors can again consider RIMM with potential for multiple-bagreturn.
VeriSign Inc. (NASDAQ: VRSN) is its web pick as "Core Businesses Among the Least Sensitive to the Macro Economy"
- contracted monopoly on .com and .net registrations through 2012 (with ahigh likelihood of renewal) and75-80% share in the market for SSLcertificates, VRSN’s core businesses are very healthy and wellpositioned…. we believe the core businesses of VRSN are among theleast sensitive to the macro economy in the tech sector.
Again, the comments provided here are excerpts from AmTech’s in-depth research call. You can also see the summaries in ALTERNATIVE ENERGY and in INFRASTRUCTURE & DEFENSE.
Jon C. Ogg
October 13, 2008
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