Miami, FL - November 21, 2012 (www.investorideas.com newswire) EmergingGrowth.com, a leading digital financial media company, Comments on MagicJack Vocal Tech (NASDAQ: CALL). Visit EmergingGrowth.com for other related stories concerning Telecom and discussions on Lumos (NASDAQ: LMOS), Clearwire Corporation (NASDAQ: CLWR), Sprint Nextel (NYSE: S) and Nokia (NYSE: NOK).
In today's market, it can be hard to find new buying opportunities as most stocks have seen a nice run up in share price and look ready to correct. Today's pick is a small cap telecom from Israel, Magicjack (NASDAQ: CALL). Magicjack has had a very good year so far as shares are up 29% year to and analysts' are forecasting an 81% gain for 2013.
Magicjack has a market cap of $336 million and currently holds a "buy" rating from analysts. Currently, the company has a price to earnings ratio of 14 and a forward price to earnings of 9. Additionally, the stock is trading at a 20% discount to price earnings growth (PEG). Earnings are expected to grow 3% next year and 18% over the next five years. Meanwhile, Magicjack's margins are decent with a gross margin of 56%, operating margin of 11% and profit margin of 17%. Currently 47% of Magicjack's outstanding shares are short. However, with continued growth we suspect a short squeeze in the intermediate term will give Magicjack the big gains that analysts' are looking for.
Magicjack recently got some great news back in October. The company announced they had received US Patent No. 8,306,201, which CEO Dan Borislow says will "make communications easier, more convenient and much less costly". This is a huge deal for the company that has sold over ten million Magicjack phone systems. The company recently announced that they had earned earnings per share of $0.78, on revenue of $15.1 million. This is a big improvement from last third quarter's report which showed a loss. Additionally, revenue saw a 64% jump from last year. Investors that are interested and have not gotten in yet should be surprised to know that operating costs dropped 16% during the last quarter.
From here we suspect that we could continue to see a depressed stock price as the bears control much of the stock and the overall market appears to be in correction mode. Currently, the price is trading at $16.47 but analysts' full year forecast for 2013 comes in at $30.50, that is an 81% rise in price! I noticed that the price action has broken down from its support trend but the RSI shows that the stock is oversold. Savvy traders could look for a possible short-term bounce. The bottom line here is that Magicjack is a company that is run very well. The stock is under pressure from the bears and the overall market but 2013 should be a bullish year for this name as it continues to cut costs and maximize earnings.
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