“The One Stock You Must Own in 2014 – The Year Mobile Takes Over”

What's Ian Wyatt's stock that booms after every new iPhone or Samsung phone is released?

By Travis Johnson, Stock Gumshoe, March 17, 2014

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Today we are blessed with another teaser pitch from Ian Wyatt, who tells us he’s got the “one stock you must own” for this year … and he’ll tell you what it is just as soon as you sign up for his Top Stock Insights newsletter.

The basic spiel is like many that have relied on the rise of Apple or the rise of mobile computing to pitch us a stock — no surprise, that, since mobile is of course becoming far more important as more people access more data via smartphone or tablet instead of via desktop computer.

We’ve seen the same basic spiel based on the rise of the iPhone (and, more recently, the duopoly of Samsung and Apple in smart phones) used to pitch stocks like Corning (GLW), which makes the gorilla glass screens most of these portable devices use, and American Tower (AMT) or their competitors, which own the physical cell phone towers that become more valuable with each antenna placed on the tower. In fact, I glossed over this pitch the first time I saw it because I expected another teaser for Corning … but no, he’s got something different cooking this time around.

So what is it? Here are your clues:

“There’s a revolution coming… and Apple is leading the charge with the release of the new iPhone 5S and 5C…

“And as millions of users activate their new smartphones — one stock is set to soar 117%!…

“Making right now the perfect time to invest in this fast growing company Barron’s says is about to ‘break out’….”

He also makes the argument that every past iteration of the iPhone has led to huge climbs in the price of the secret stock he’s teasing … and that it’s now poised to “rocket up again.”

So what specifically does this company sell? He’s a little vague on that point, here’s what we’re told:

“Not just Apple… this little-known company profits every time an iPhone AND a Samsung Galaxy smartphone is activated.

“New or old… this company cashes in every time Apple and Samsung sells a smartphone.

“Here’s why…

“All the slick features of Apple’s iPhones and Samsung’s Galaxy smartphones – simply can’t function without this company’s indispensible technology….

“iPhones and Samsung’s Galaxy phones need fast, limitless access to data… available 24/7… and streamed from cell towers and buildings all over the world….

“Apple iPhone 5 and Samsung Galaxy S III owners consume and upload more data than any other smartphones in history…. the amount of mobile Internet traffic in 2012 was greater than all prior years combined!

“And this is just the beginning… According to future projections, smartphone data usage is set to nearly double EVERY YEAR for the next 3 years!”

But then we get a few clues that are actually useful:

“All this skyrocketing mobile data usage means windfall profits for one company…

“You see, it’s this company that provides all the data iPhone and Samsung smartphone owners need.

“It owns pipelines of data that run to iPhones and Samsung smartphones that allow them to use apps and access the Internet at lightning fast speeds from anywhere, anytime.

“If that sounds complicated… it is. No ordinary company could be tasked with such a vital role.

“This company manufactures crucial systems… including lasers, photodetectors, and integrated circuits… that make up the heart of our nation’s mobile networks….

“It currently owns 1,157 patents in the US and overseas to protect and profit from this vital technology.”

Then a few more clues to toss into the ‘ol Thinkolator:

“Revenue almost doubled in a two years when carriers including Verizon and AT&T accelerated their mobile networks to 3G speeds.

“And now with these carriers upgrading their networks to 4G – Barron’s reports this company’s ‘revenue continues to ramp.’

“Plus, last year, cash on the books also increased, by $28.1 million, bringing this company’s total cash hoard up to $316.5 million… the sure sign of a healthy tech firm.

“And shares are cheap… the stock trades at just 14.8-times current year earnings and 13.4-times forward earnings. That’s not expensive at all – and well below the sector average P/E of 34!”

So … hoodat?

Thinkolator sez: This is Finisar (FNSR)

Finisar is a mid cap company, with a market capitalization of just over $2 billion, and they call themselves the “World’s Largest Supplier of Optical Solutions for the Communications Industry.” They’ve been around for about 25 years and public for 15, coming public just in time to get one of those ridiculous tech boom share prices in 1999 and 2000 (they hit $400 a share or so back then, the stock is right around $25 now after a very good year).

And the quotes from Barron’s are more or less accurate, though they’re from a Barron’s blog entry about the Citi analyst who thought FNSR and Ciena (CIEN) might be hitting an inflection point for a nice rise in their share prices … and now that it’s been a year since that article was posted, we can see that yes, they were at a nice inflection point — both are up nicely over the last year, and FNSR in particular had a very sharp climb starting last Summer, after they began to actually post earnings growth.

Will it continue? Well, analysts aren’t pointing to huge earnings growth like last year’s to continue (last year was something like 140% earnings growth), but the company is continuing to gradually increase market share and margins have held firm and their balance sheet looks good (the $316.7 million figure for cash on the books was accurate a quarter or two ago, it has grown … though they do have some debt, too, so it’s about $300 million in net cash), so analysts are still forecasting 25% earnings growth going forward.

Which, if true, would mean the shares are an easy buy here at about 19X current year earnings (their fiscal year ends next month) and 14X next year’s earnings.

I don’t know their products at all, other than that they seem to have a very wide offering of all of the optical switches and lasers and stuff that fiberoptic networks need — and they have had pretty flat to slowly declining sales to traditional telecom in recent years, but have pretty dramatically boosted their sales to data companies, presumably data centers who are using more optical equipment, which has kept the overall revenue number mostly climbing. They are not specifically leveraged to mobile over other segments of the telecom industry, but the growing demand for data is hitting all data centers, and presumably their optical equipment is or can be used in all the places where mobile data is brought into the fixed optical networks as a way to continue speeding up the system and increasing capacity.

So that’s about all I can tell you — it’s a decent looking company at first glance, and they’ve had a good year and the analysts think they’re undervalued based on their expected growth rate, but I don’t know a lot about them. If you’ve got an opinion on FNSR or optical networking or any of that jazz, feel free to chime right in with a comment below (or, of course, if you’ve tried out Top Stock Insights please hit us up with a review of your experience here).


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26 Comments on "“The One Stock You Must Own in 2014 – The Year Mobile Takes Over”"

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vivian lewis
Guest
0
March 17, 2014 1:44 pm

We used to own an Israel competitor but sold because we made so much money. It is called Mellanox, MLNX. These stocks swing.

Slick Rick
Guest
0
Slick Rick
March 17, 2014 2:48 pm

SPIHF is another stock which is certainly a master of cloud technology …….over time IMHO SPIHF cold be a mega bagger!

hipockets
Irregular
1001
March 17, 2014 3:17 pm
Wow, Slick Rick! SPIHF is up over 500 % in the past 9 months. It’s a Canadian stock trading on the OTCQX International interchange (whatever that is) (at the moment the price is $7.12) and on TSX-V as “ANY”. From their website http://www.sphere3d.com/ : “Productivity software, Computer Aided Design (CAD) software, social media sites, proprietary portals and an ever increasing host of others, will all look and function the same way on your PC, MAC, smartphone, tablet, smart TV or web-enabled device, regardless of the operating system, and as they were initially designed to perform.” I think that means the… Read more »
Yaw B
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0
Yaw B
April 4, 2014 10:51 am

Slick Rick,
any views on spihf latest annnouncement in connection with Dell? The stock is showing some upward trend.

hipockets
Irregular
1001
March 17, 2014 2:51 pm

Hi, Vivian –

Please define “swing”. Do you mean the stocks are volatile?

Thanks.

persiflage
Member
0
persiflage
March 17, 2014 3:24 pm

I am generally confused by the percentage increases alluded to by both Wyatt and Gumshoe, the former commenting about “set to soar 117%,” the latter “140% earnings growth.” Taking the first example, does it means the original value plus the percentage – X+1.17X or 2.17 times the original amount; or does it mean a 17% increase? And did last year’s earnings grow by a factor of 2.4 or was it a 40% increase?

Myron Martin
Guest
0
March 17, 2014 3:49 pm

In this same general field of fiber optics buildout a company I profiled a few months ago has made their first acquisition adding some very talented and experienced management, as well as significant world wide sales. They are building a foundation for solid growth in the years ahead. Take a look @ Valdor Technology VTI-V and read their latest news releases.

kshare1956
Member
0
kshare1956
March 17, 2014 4:06 pm
I know this stock very well and have followed it for years. The company is sound and just finished a new plant in China. Then immediately started another in order to increase capacity. Not sure why the stock is so volatile but the story is sound. They are flush with cash as well as having products with a long cycle in the fiber optics field. There was a rumor CSCO was interested in this company. Just a rumor but a good play on the idea that we are always going to increase bandwith and this is an under appreciated stock.… Read more »
Maerton
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0
Maerton
March 19, 2014 5:03 pm

I bought Finisar today. I think they will be $35 within 2 months.
They are on the right path.
Worth a small gamble.

irvc
Member
0
irvc
March 17, 2014 6:58 pm

FNSR is a provider of fiber optic subsystems, network test and monitoring systems which enable high-speed data communications over local area networks, storage area networks and metropolitan access networks. 46.47% of it’s stock is owned by institutions and I personally own a fair amount. Based on the earnings consensus for the fiscal year ending April 2015, a highly regarded tech advisor estimates a price range of 34 to 37.50.

kshare1956
Member
0
kshare1956
March 17, 2014 7:12 pm

Irving I have seen the exact same targets from Next Inning and the reccomended buy was when the stock was at 12$. It does make some wild swings though creating some interesting swing trades. But a definite buy hold for the next few years if I squint I can see mid 40s after this market quiets.

kshare1956
Member
0
kshare1956
March 17, 2014 7:15 pm

I also suggest listening to the conference call from last week. Jeffries used to hate this stock. Now they are on the bandwagon go figure.

kshare1956
Member
0
kshare1956
March 17, 2014 7:18 pm

I do not comment as a matter of fact this is my first one. But i do enjoy much of the information that flows through all the irregulars.

jrotcod
Member
0
jrotcod
March 18, 2014 9:29 am

Spot on Gene. It had that break above 25 in late October in +147% vol, but then came crashing down a few days later. It has tried twice since to break out without success. Just now it is trying a third time. I agree lets look for a hi vol break lasting more than 3 or 4 days.

eugene11803
Irregular
8
eugene11803
March 17, 2014 7:44 pm

The chart shows FNSR can’t hold above 25. Wait for the breakout on high volume (which may never come). A better smartphone component choice may be INVN. At least FNSR is not a foreign penny stock mining bio-med company. I will keep an eye on it.

Gary W
Guest
0
Gary W
March 17, 2014 11:28 pm

The company must have acquired those over 1,000 patents. From 1987 to 2014 they have only obtained six US patents under their own name, and they’re not huge deals. Check them out at patentobserver dot com.

Gary W
Guest
0
Gary W
March 17, 2014 11:31 pm

Also this was a mining venture established in 2012, and acquired Sphere 3D, a Silicon Valley start-up, in 2012. The executive team is so-so but the CFO is great and the Board is OK. As a tech entrepreneur I don’t see the juices that make for great companies.

Frenchy
Guest
0
Frenchy
March 18, 2014 4:45 am

Re #2: Hi Pockets, is SPIHF now in overvalued territory after this huge run up?

hipockets
Irregular
1001
March 18, 2014 8:32 pm
Frenchy, I’m not experienced enough at investing to give you a meaningul answer. But here’s some more information I found. It went public around the middle of August, 2013. MarketWatch.com does not show any insider transactions or financial data. http://finance.yahoo.com/q/is?s=SPIHF+Income+Statement&annual has a modicum of financial data, but it is meaningless due to it going public in August, 2013. It’s followed by two analysts. One has a buy rating, the other a buy-hold. I feel that the fact that its price increase has been steady rather than popping up is a positive. According to Scottrade: “Sphere 3D Corporation, formerly T.B. Mining… Read more »
hipockets
Irregular
1001
March 18, 2014 11:21 pm

Leaving no term unstoned, according to Wikipedia, “A reverse merger takeover or reverse wenk [sic] merger (reverse IPO) is the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public.[1] The transaction typically requires reorganization of capitalization of the acquiring company.”

The only definition of “wenk” I could find was on UrbanDictionary.com. Don’t think it applies to mergers. “>)

Frenchy
Guest
0
Frenchy
March 19, 2014 6:39 am

Thanks Hi Pocket, my time in Afghanistan is limited. Appreciate the help and the insight. Always good to learn something new (reverse merger takeover).

hipockets
Irregular
1001
March 19, 2014 3:20 pm

Frenchy – Since you are in Afghanistan, you could well be in our armed forces. If so, thank you for your service, and my best wishes to you for a safe return. Pass the thought along your brethern for me.

May the Force be with all of you (no pun intended).

If you are not in our armed forces, you still have my best wishes for whatever it is you do.

May all your trades be triples! [ I want your advice if they are :>) ]

hipockets
Irregular
1001
March 19, 2014 9:28 pm

Aw, shucks! That was supposed to be, “Pass the thought along to your brethern for me.”

Frenchy
Guest
0
Frenchy
March 20, 2014 6:34 am

Thanks Hi Pockets, really appreciate that. I’ve retired from the US Marine Corps 5 years ago and now doing the contractor stint. Our Armed Forces do deserve our best wishes. S/F

Steve
Guest
0
March 30, 2014 3:44 am

The word is BRETHREN. I too offer best wishes to our military, and others serving our country for good.

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