New Merchandise for Tech Five & Dime
The tech-heavy Nasdaq has taken a beating in the first two weeks of October, and this has caused some price discounts for the stocks on the shelves of the Tech Stock Five & Dime. But of the 20 stocks on the shelves, only two are down by 5% or more: Skyworks (SWKS) is the biggest loser, down 23.8%; Entrust (ENTU) is not doing as badly, down 5.8%.
The winners so far are numerous:
Actuate (ACTU), up 5.0%.
Tut Systems (TUTS), up 6.1%.
Lucent (LU), up 6.3%.
Westell (WSTL), up 6.9%.
Ciena (CIEN), up 17.1%.
RealNetworks (RNWK), up an impressive 37.0%.
Not too bad, with the Nasdaq down 4.4% since Aug. 22, when I started this series.
I've presented the performance of all the "departments" of the Tech Stock Five & Dime in a table below, but first, I'd like to add four new names to the shelves. Whether the market is going up or down, there are values to be found. These qualify, but you should use my guidelines to monitor the risk/reward.
New MerchandiseThe first addition is Extreme Networks (EXTR), which makes network infrastructure equipment. At $4.45, its shares are a huge 74.9% undervalued, with a negative weekly chart profile and the five-week modified moving average at $4.49. My monthly value level is $3.11, with a quarterly pivot at $4.75 and quarterly risky level at $6.21. Next is Immersion (IMMR), which designs and licenses technology that allows digital device users to interact with the devices through their sense of touch. At $6.74, the stock is 67.2% undervalued. It has a positive weekly chart profile, and its five-week modified moving average is at $6.27. My monthly value level is $5.11, with a quarterly pivot at $6.32 and quarterly risky level at $10.44. Wireless play Sonus Networks (SONS) is up next; at $4.99, the stock is 55.5% undervalued, with a negative weekly chart profile and the five-week modified moving average at $5.07. My quarterly value level is $3.75, with my quarterly risky level at $6.09. Squaring the quartet is content management software company Stellent (STEL). At $8.74, the stock is 56.4% undervalued. It has a positive weekly chart profile, and its five-week modified moving average stands at $8.33. My monthly value level is $7.71, with a quarterly pivot at $9.03 and quarterly risky level at $11.20. These cheap valuations are attractive, but before you buy, be aware that my model indicates that it's most prudent to add to positions at a value level, and to book profits on strength to a risky level. For example, a trader who buys at value should consider selling at the nearest pivot. Also note that Extreme and Sonus have negative weekly charts. This means that these stocks have a better chance of declining before they rise. Immersion and Stellent both have positive weekly chart profiles, so they're less likely to dip in the near term. The goal of my model is to provide a valuation framework that will assist in applying prudent discipline to managing these positions.
Taking Stock of the InventoryTo qualify for the shelves of the Tech Stock Five & Dime, a stock needs to be at least 40% undervalued according to my model. I've defined other aspects of my model below.
|The Stocks on the Shelves|
|Company Name||Date Posted||Price Close||High Trade||% to High||Price 10/13/2005||Gain/Loss||Undervalued||12x3 Stoch||5-Week MMA||Value Level||Pivot||Risky Level|
|Stocks $1 to $3|
|Actuate (ACTU:Nasdaq)||8/22/2005||$2.38||$2.70||13.40%||$2.50||5.00%||57.70%||RM||$2.47||2.14 Q||3.17 Q|
|Lucent (LU:NYSE)||8/22/2005||$2.87||$3.49||21.60%||$3.05||6.30%||57.70%||DM||$3.11||2.62 M||4.47 Q|
|Ciena (CIEN:Nasdaq)||8/22/2005||$2.11||$2.90||37.40%||$2.47||17.10%||74.90%||RM||$2.39||2.13 Q|
|Stocks $3 to $5|
|Lucent (LU:NYSE)||9/7/2005||$3.18||$3.49||9.70%||$3.05||-4.10%||57.70%||DM||$3.11||2.62 M||4.47 Q|
|Intellisync (SYNC:Nasdaq)||9/7/2005||$4.05||$4.89||20.70%||$4.05||0.00%||60.30%||DM||$4.04||3.23 Q||4.64 M|
|Terayon Comm (TERN:Nasdaq)||9/7/2005||$3.40||$4.10||20.60%||$3.40||0.00%||39.80%||DM||$3.47||3.45 M||4.16 Q|
|Stocks $5 to $10|
|Interwoven (IWOV:Nasdaq)||9/6/2005||$8.40||$8.61||2.50%||$8.35||-0.60%||74.60%||RM||$8.11||7.63 Q||10.17 Q|
|Micromuse (MUSE:Nasdaq)||9/6/2005||$6.96||$8.04||15.50%||$7.25||4.20%||61.10%||RM||$6.87||5.98 M||7.00 M|
|RealNetworks (RNWK:Nasdaq)||9/6/2005||$5.41||$8.50||57.10%||$7.41||37.00%||12.40%||RM||$5.82||5.07 Q|
|Ditech Comm (DITC:Nasdaq)||9/21/2005||$6.79||$6.90||1.60%||$6.63||-2.40%||39.30%||DM||$6.86||4.25 M|
|Tellabs (TLAB:Nasdaq)||9/21/2005||$9.50||$10.73||12.90%||$9.60||1.10%||40.40%||DM||$9.55||8.15 M||10.37 M|
|Tut Systems (TUTS:Nasdaq)||9/21/2005||$3.10||$3.39||9.40%||$3.29||6.10%||74.60%||RM||$3.18||2.63 M||4.68 S|
|Westell Tech (WSTL:Nasdaq)||9/21/2005||$3.64||$4.00||9.90%||$3.89||6.90%||30.90%||OS||$3.96||3.27 A||5.69 S||Computer Manufacturing|
|Gateway (GTW:NYSE)||9/21/2005||$2.60||$2.90||11.50%||$2.57||-1.20%||74.20%||OS||$2.83||2.23 M||2.80 Q||5.47 Q|
|SunMicro (SUNW:Nasdaq)||9/21/2005||$3.94||$4.56||15.70%||$3.96||0.50%||27.90%||DM||$3.93||3.40 M||3.66 Q||5.14 Q|
|Skyworks (SWKS:Nasdaq)||9/21/2005||$6.84||$7.16||4.70%||$5.21||-23.80%||69.10%||DM||$6.68||4.36 M||6.07 M||7.74 Q|
|Entrust (ENTU:Nasdaq)||9/21/2005||$5.51||$5.69||3.30%||$5.19||-5.80%||43.10%||DM||$5.58||3.76 Q||5.44 M||6.17 M|
|BEA Systems (BEAS:Nasdaq)||9/23/2005||$8.43||$9.04||7.20%||$8.26||-2.00%||52.00%||DM||$8.69||6.57 Q||7.98 M|
|Sapient (SAPE:Nasdaq)||9/23/2005||$6.37||$6.70||5.20%||$6.11||-4.10%||47.40%||OS||$6.59||6.71 M||9.97 Q|
|WebMethods (WEBM:Nasdaq)||9/23/2005||$6.45||$7.27||12.70%||$6.32||-2.00%||43.20%||DM||$6.55||4.51 M||6.38 Q|
|Source: Global Market Consultants|
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