“Grab Your Share of Al Gore’s $100 Million … Buy this Politically Correct Doubler”

High-Tech pick from Louis Navellier revealed

By Travis Johnson, Stock Gumshoe, August 31, 2010

Here we are again — another promise of a “doubler” from Louis Navellier, who apparently has never seen an earnings beater he didn’t want to buy.

This time, though, his copywriters have a bit of an odd pitch on this one — they’re using Al Gore, who among the investing punditry class is often cast as a villainous buffoon, and saying that one of the reasons you should buy this stock is that Gore might buy it with his millions.

Here’s how they summarize the urgency:

“Our research shows that this company could be (1) on the short list of acquisitions that Al Gore’s green/tech team may be targeting to add to his $100 million retirement stash, and (2) you have 24 hours to establish your position before the next surge begins.”

So of course, you have to subscribe to Navellier’s Emerging Growth RIGHT NOW!

Or at least, read today’s exciting Gumshoe article RIGHT NOW! I’ll give you a moment to decide which path you’ll follow.

The free one? You’re very wise … let’s continue, shall we? I do love having so many kind and generous readers who contribute to the cause as members of the Stock Gumshoe Irregulars, but I like that it’s voluntary, and that it ain’t $995 a year.

The connections to Al Gore are, frankly, tenuous at best — but I’ll paraphrase for you:

They’re a tech company, therefore they’re in the “green/tech” profit profile that Al Gore has used to profit so successfully from his life as a private investor.

And they work to fight internet bottlenecks, so they could be a big help for his Current TV website (which apparently reaches .00095% of the global web audience according to Alexa, so he needs it a lot more than StockGumshoe, which is currently knocking the cover off the ball with .00005% of the globe’s attention … though my readers, of course, are better lookin’).

After the Al Gore tomfoolery, we get to some actual clues about who this company is:

“The company has ZERO DEBT, just declared earnings growth of 474%, and is clearly on track to repeating these results come October and handing investors another 12-month 279% gain.

“With … Vanguard, Fidelity, Oppenheimer and Bank of America already in to the tune of $500 million, you couldn’t ask for more signs this one has “winner” written all over it.”

OK, so that’s a few hard numbers and clues we can verify. What else are we told about this “doubler?”

It’s priced at about $32 (and soon, $64!)

This is a “little known technology juggernaut,” apparently, and Navellier says that …

“The company’s fortunes are set to rise exponentially again in 2010, as Internet traffic reaches new heights and this technology keeps web sites from crashing.”

And finally, we get the succinct summary of the “story” — why this company is going to keep growing:

“The company’s technology solves the No. 1 problem facing Internet Service Providers, traffic jams that cause websites to crash and companies to lose money.”

So who is this stock? Well, there are a few potential matches in the “internet traffic cop” business, but when I feed those clues into the mighty, mighty Thinkolator the only possible answer is …

Acme Packet (APKT — click here for a free trend analysis from Marketclub, one of my advertising partners …. as you’d usually guess from a Navellier stock, the trend is very good right at the moment)

This is a stock I’ve heard chatter about from time to time as its had such a nice big run for the past year or so, but I’ve never actually looked closely at them before.

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And no, these are not the folks who supply Wile E. Coyote with a steady supply of rocket boots.

Acme Packet describes itself, in big letters on their website, as “The leader in session border control for trusted, first-class IP interactive communications.”

No, I don’t know what that means either.

Session border control is apparently a key technology for audio and video transmission on the web, particularly real-time streaming transmissions and VOIP calls that get easily garbled, and Acme Packet, according to Morningstar, has a head start on this sector and, thanks to tight relationships with many of the big telecom service providers and equipment makers, about a 50% market share.

I can’t tell you whether or not session border controllers (SBCs) are going to continue to be the key technology for real-time video and audio, but certainly they’re in a good spot right now and have been growing ridiculously fast — which is why the stock is really, really expensive. APKT trades at a forward estimated PE of 37 and a trailing PE of 70, and has a market valuation of $2 billion — which means they’re trading for more than 10X sales. That’s not completely out of bounds, of course, especially for a company that’s growing this fast, but a valuation like that does have to rely on an assumption that the growth will continue at a similar pace for at least a couple years.

They don’t have any debt, which is true of most similar fast-growing tech companies, and analysts do see the growth continuing to the extent that they’re giving this one a price/earnings/growth (PEG) ratio of 1.7, which means they’re in the same basic valuation neighborhood as much larger and broader-based “internet traffic cop” companies like Akamai (AKAM) and F5 Networks (FFIV). They are profitable, though, which is more than you can say for some of the other little guys like Limelight Networks (LLNW), which hasn’t yet delivered on the promise of being the “Akamai killer.”

After a quick scan of a few articles, the concern seems to be that completely new technologies or ways of transmitting video on the web could supplant Acme Packet’s technology or that the packet handling could be built into systems from Cisco et al and bypass the need for Acme’s, um, st