Aaron Katsman
www.IsraelNewsletter.com
In yesterday’s Barron’s online, a story ran about potential M&A prospects and none other than the Israeli security company Checkpoint(CHKP), made the list as a potential target. To readers of our blog this comes as no surprise. Back in November we posted about the potential IBM buyout of Checkpoint. Back then Val Rahmani, IBM’s (IBM) general manager of infrastructure management for global technology services, saw security as a key to growth. Val said, “We’re looking at a lot of different companies right now, as we always do in a number of different spaces within security.”
With the major multi-nationals cutting back on R&D spending I would doubt that IBM, for example, would try and build a system in house, rather they can acquire a security play, and get a real company that has very real earnings.
Keep an eye on Checkpoint, as it may go down as Israel’s biggest acquisition ever. After all it’s not just IOI that thinks so, but also Barron’s.
Disclosure: Author’s fund has a position in CHKP. He holds no position in any other stock mentioned as of 3/18/08.
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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Written by: Aaron Katsman | February 25, 2008
Aaron Katsman
www.IsraelNewsletter.com
Shares of Marvell Technology (MRVL) are trading higher as a story in Barron’s says that shares could double in two years as the company’s chips find their way into new products and help boost profits. Barron’s thinks that a potential catalyst for the stock will be as Research in Motion (RIMM) launches 3G BlackBerry handsets using Marvell chips.
Marvell, a fallen tech-darling, has dropped over 60% since early ‘06. Beset by problems from the options backdating scandal and falling margins, investors have totally lost confidence in the name. More than once over the last 12 months we have heard that the stock is a great buy, only to watch it fall more.
While some investors will cry that now that Barron’s wrote about them the stock is doomed, the potential for the stock to recover is very real. Improving margins, the aforementioned launch of the 3G Blackberry, new products and cost cutting all could possibly help the stock get back on track.
Some buy-side investors are betting that Marvell can earn $1.00 to $1.50 if it executes well in the fiscal year ended January 2010 (again, not counting options). Sangeeth Peruri, of J&W Seligman, thinks such earnings would return the forward-earnings multiple on the stock from today’s 16 times earnings back to the level of over 20 times that Marvell enjoyed in years past. If so, Marvell’s shares could more than double from 11 today.
“Revenues are growing, driven by a lot of product cycles,” says Peruri. “You could get 30-50% annual earnings growth for the next three-to-five years.”
Disclosure: Author’s fund holds a position in MRVL. He has no position in any other stock mentioned as of 2/25/08.
Please see our Disclaimer HERE.
NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
