As I mentioned here a few weeks ago, last year’s second-best-performing Top Picks stock was Allot Communications (ALLT), recommended by SmallCapInvestor PRO. (The best performer was acquired a couple months after being recommended.) I mention this again because the 2012 Top Picks included several stocks that could be the next Allot Communications.
Allot’s business is technology that inspects web and mobile traffic so carriers can know more about how their networks are used. Their technology helps keep information moving quickly and efficiently around the globe as people use more and more data every day.
This year’s Top Picks included several stocks from the communications technology sector that are reminiscent of Allot.
One thing about companies behind the Internet and mobile networks is that their technology is often unseen, and sometimes hard to understand. But occasionally one catches the eye of Wall Street—usually because its earnings are hard to ignore—as Allot did. And when that happens, the investors who knew about it first get richly rewarded.
Of course, the technology industry moves fast, and some companies fail before they ever get noticed. So it’s a relatively high risk-reward proposition (especially since two of the three stocks below trade under $2). But if that sounds like something you can handle, consider these communications technology leaders from the Digest’s Top Picks.
Leo E. Rishty, editor of Unique Situations, recommended Alcatel-Lucent (ALU) based on its new lightRadio wireless technology:
“Envision all of those [cell phone] towers disappearing and being replaced with a little box the size of a Big Mac hamburger box. Bell Labs, a wholly-owned subsidiary of Alcatel-Lucent, has developed such a product. It is known as LTE radio. They can be placed on the top of a light post or the top of any building (or on the side.) These little boxes are able to relay cell phone signals with less interference than the ugly 200-foot towers [where] cell providers are sharing the tower and creating interference and loss of signal. None of that is present in the Alcatel-Lucent lightRadio. Production of LTE radio is expected to commence shortly, and the product should be available in the early part of 2012. Alcatel-Lucent is a leader in mobile, fixed, IP and optics technologies, and a pioneer in applications and services. Alcatel-Lucent includes Bell Labs, one of the world’s foremost centers for research and innovation in communications technology. An investment in Bell Labs would be worth more than all of ALU. They have thousands of viable patents related to the telecom field, and more each day. I rate Alcatel-Lucent a Strong Buy with a conservative target of $4 to $5 a share.”
As an addendum, this is the second glowing recommendation of Alcatel-Lucent’s lightRadio technology that I’ve seen lately.
The second technology stock comes from Dr. John Faessel, editor of On The Market. His Top Pick is CommerceTel Corp. (MFON), which trades over the counter and under $2:
“Mobile—the mobile device and its burgeoning array of uses—is a trillion-dollar industry revolutionizing the way information is disseminated and integrated. As a marketing tool it has no peer, and it’s the fastest growing sector of the advertising world. CommerceTel Corp. has over 1,500 major brands licensing their proprietary technology for connecting and engaging consumers’ mobile phones regardless of phone type, method (SMS, IVR, MMS) or wireless network. It allows for delivery of HD-quality graphics and animation to screens—whether broadcast, stadium board or digital signage screens—connecting the advertised company or brand to the consumer. The software is called C-4 and it won the Sybase Innovator of the Year Award. CommerceTel’s customers include McDonald’s, Pepsi, CNN, Disney, Sony Pictures, the NFL, AT&T and NBC. Taken as a whole, MFON is an unknown mini tiger with multi-bag potential. I am looking for more of the excellent quarter-over-quarter growth it has had going forward, and I believe that we’ll see them acquired at a fat multiple. It’s only a matter of time.”
Finally, Geoffrey Eiten, editor of OTC Growth Stock Watch, recommends Clearfield, Inc. (CLFD):
“Clearfield designs, manufactures and distributes fiber optic management products for the communications networks of leading ILECS, CLECs, MSO/cable TV companies and mobile broadband providers. The company helps service providers solve the ‘fiber puzzle,’ which is how to reduce high costs associated with deploying, managing, protecting and scaling a fiber optic network to deliver the mobile, residential and business services customers want. Based on the patented Clearview Cassette, the company deploys a unique single-architecture, modular fiber management platform that is designed to lower the cost of broadband deployment and maintenance by consolidating, protecting and distributing incoming and outgoing fiber circuits. These end-to-end solutions enable Clearfield’s customers to scale their operations as their subscriber revenues increase. Fiscal year 2011 has been a break-out year for Clearfield. Although the industry was plagued with macro-economic challenges, the company aggressively grew revenues and converted an increasing amount of net income into shareholder value. Key to this success has been its mobile marketing initiatives in which its product line was brought directly to customer sites. I expect that CLFD will continue its high, profitable growth rate and also expect a big increase in shareholder value during 2012.”
People around the world are using more data every day, and the communications industry is constantly upgrading its networks with the newest and best technology in order to keep us connected and informed. Some of the companies that invent this technology will become big winners—only time will tell if that will include one of the stocks above!
Wishing you success in your investing and beyond,
Chloe Lutts
Editor of Investment of the Week
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Wishing you success in your investing and beyond,
Chloe Lutts
Editor Investment of the Week
