Navellier’s Stock that will Gain 407% from the “Christmas Internet Outage”

Sniffing out the newest recommendation from Navellier's Emerging Growth

By Travis Johnson, Stock Gumshoe, December 8, 2011

What is this “Christmas Internet Outage” that Louis Navellier is teasing us about?

Well, the short answer is that so many folks will get online goodies from Santa that they’ll swamp the Internet. Which is sort of possible, I guess — like most holidays, Christmas web traffic as a general rule is down substantially from peak work days, but it’s “nontraditional” web traffic from home, stuff like apps and games and videos and video chatting with relatives. And lots of facebook. So I guess it puts different pressures on different parts of the internet.

So how does Navellier think this will impact you? Well, the important thing for us is that he apparently believes it will make us filthy stinkin’ rich. Or at least, “” rich … which is certainly a lot better than I do most of the time. Here’s how he describes it in the beginning of his ad:

“There’s a good chance your Internet connection could go offline Christmas morning, and there’s no stopping it.

“And it’s all because hundreds of thousands of new iPhone, BlackBerry, Xbox and gaming applications will begin to stream too much data and video for the networks to handle.
The result will be similar to the Internet outage that knocked millions of BlackBerry users offline in October of 2011 when a few backbone systems failed to keep Internet traffic flowing smoothly.

“The same thing is about to take place again, my friend, come Christmas morning as thousands—if not millions—of Americans, Europeans, Latin Americans and Chinese wake up Christmas morning to a shiny new iPhone, iPad, game station or laptop and they all begin to download songs, stream video or play online games.

“The inevitable traffic bottleneck could make BlackBerry’s October outage look like child’s play as the surge in bandwidth usage reaches epic proportions and the chain reaction throws millions of Internet users off line….

“My newest recommendation that I will be releasing TONIGHT could make another 407% profit from preventing it.”

OK, this ad actually came in on Wednesday — so that would have been last night that he released it. Will the stock have already taken that 20%, 30% even 50% leap that he seems to expect momentarily? I know, the suspense is killing you … so let’s sniff out any clues he provides and Thinkolate the heck out of this one, shall we?

We get but a few specific clues — some customers:

“That’s why virtually every big ISP and telecommunications company on the planet—including Vodafone, Orange, AT&T and Verizon—are racing to keep their network resources up and running in advance of the surge.

“That’s why also why virtually all of them are choosing our solution provider over dozens of global competitors to prevent the same kind of bandwidth bottleneck and outage that brought BlackBerry networks to its knees.”

And a vague description of their busienss, along with a few numbers:

“And it’s all because our company’s software and hardware traffic solution can, metaphorically speaking, get a fire hose’s worth of high-speed data out of an existing garden hose wire line connection and without bottlenecks or outages.

“The result not only ensures the smooth deliver of broadband services to customers but—perhaps most important—ensures that network management costs do not outpace revenue growth and without spending billion on wire line upgrades.

“That’s what puts my newest recommendation in the catbird seat of the bandwidth bottleneck solutions that all ISPs and telecommunication companies must acquire to prevent hundreds of thousands of new bandwidth-hogging smartphone applications (and millions of new users) that can slow the Internet down and result in outages.
So it’s no wonder the company’s sales jumped 37% last quarter while enjoying 175% earnings growth—all while handing investors 407% gains since June 29, 2009.”

I know what you’re thinking — “wait, Mr. Gumshoe, that’s not enough clues!” But no, the mighty, mighty Thinkolator is, like always (as far as you know), up to the challenge. And our answer comes out, as metaphorically as water from Navellier’s firehose: This is Allot Communications (ALLT)

Allot, which happens to be an Israeli company, is one of a legion of tech firms that are trying to declog, rejigger, reroute, enhance or otherwise speed up global networks — and I have no idea which ones are best. In simpler times I was a big fan of Akamai, as an innovator in the development of edge servers that closed the physical wire gap between you and your iTunes account (or whatever) and sped up the internet experience … but in the last couple years this business seems to have gotten much more complicated and specialized and, to some degree, commoditized (and brought down Akamai’s margins and share price). That’s not exactly the same thing Allot does, but it’s aiming at the same general problem: too many large files and streaming video and audio streams, too little bandwidth. Some companies compress the files, some companies change the way they’re transmitted, and I understand almost none of it.

But Allot did report 175% earnings growth (175.9%, actually, Navellier is being uncharacteristically modest) last quarter, and 37% revenue growth — so that’