Harmonic (HLIT – Nasdaq)
Dear Bottarelli Research Member,
What a wonderful ride we’ve had in a number of our open positions! With GMO and BCTE.OB breaking out to new highs, PLM and RPTN ticking up nicely, and DNDN absolutely blasting off, it goes to show you just how valuable our small cap research can be for your wealth. In terms of DNDN, there is nothing wrong with taking your seed money off the table and letting the remainder of the position ride. After all, when was the last time you had a 642.20% winner?
I also want you to take your seed money off the table on GMO and hold the rest, as I believe this company is doing everything right. PLM has gotten their financing together so hang on — this should be a great stock. I want to add to it on any pull backs. But now on to this week’s pick…
I want to get you positioned in a sector that’s just now coming into its own: IPTV. The company I’m recommending this week was a high-flier back in the 1990s, but the technology was just too advanced at that time. Now it’s time to get back on board — because just about every satellite company in the world uses them, and I firmly believe we are right now setting up for big move in the stock. The company is Harmonic (HLIT – NASDAQ) and it’s a buy under $10.50. I’ll turn things over to Bryan in just a moment. But before I do, I just wanted to comment on some “behind the scenes” action between Bryan and myself that I believe will make you folks very happy.
You see, Bryan and I entered CNBC’s million dollar portfolio challenge — and we put our small cap picks up against the best investors in the country. And guess what? The stocks we wanted to buy were none other than GMO, PLM, and DNDN. But unfortunately, CNBC would not allow Bryan to buy these picks due to the market cap limitations of their contest. Folks I want you to know that if CNBC would have allowed Bryan to make these picks, he would have won this contest by a landslide! I’m not kidding. Our million dollar portfolio would have more than quadrupled — blowing the top contestants out of the water! But that’s fine, we’ll just keep these tremendous small cap picks between you and me. Because after all, as part of our inner circle, the goal here is to make you real money. And that’s what we’ll continue to do, week after week. So with that, here’s Bryan with the skinny on Harmonic (HLIT – NASDAQ).
Sincerely,
Winning Awards, Beating Earnings Estimates, and Quietly Gaining Market Share. What More Could You Want from a Small Cap Pick?!
To understand Harmonic (HLIT – NASDAQ), it’s best to understand IPTV. You see, IPTV (which stands for Internet Protocol Television) is a system where a digital television signal is delivered using the Internet. In other words, IPTV is television content received by the viewer through the technologies that power the Internet, instead of being delivered through traditional formats like cable.
For residential users like you and me, IPTV is often provided in conjunction with Video on Demand and may be bundled with Internet services such as Web access and VoIP. When you bundle IPTV, VoIP and Internet access together — you get a “Triple Play” (which is how some broadband servers market these services to users).
It’s becoming increasingly popular for high-end TV to get delivered using computer networks, and Harmonic is the company that makes this delivery possible. They’re the leading provider of high performance video solutions that enable service providers to efficiently deliver the next generation of broadcast and on-demand services including high definition, video-on-demand, network personal video recording, and time-shifted TV.
In short, Harmonic’s digital video, broadband optical access, and software solutions offer consumers a personalized viewing experience that is driving the business models of the future. And in the same breath, Harmonic’s technology can offer cable, satellite, broadcast and telecom providers increased revenues and lower operational expenditures. It’s a win/win for everyone — and overseas the technology is really catching on.
For example, Harmonic’s market-leading video compression technology has already been deployed by CanalSatellite (serving France), PCCW (serving Hong Kong), SingTel (serving Singapore), and T-Com Germany (serving Germany). So while HLIT’s technology is still a secret here in the US, its’ certainly growing popular overseas. It’s only a matter of time before it catches on here, making today’s “buy” truly an undervalued proposition.
Their technology is so dominant, in fact, that Harmonic just won best-in-class for three of the five categories at the IPTV World Series Awards in London. The growing demand for their products is why Harmonic swung to a fourth-quarter profit and an 18.2% jump in sales. Their quarterly net income was $5 million ($0.07 cents per share) versus a loss of $2 million (or $0.03 per share) a year ago. As HLIT continues to quietly gain market share, win awards, and beat earnings estimates, I think it offers you a prime opportunity to own the shares at current levels. So here’s your latest small cap pick:
PLAY: Buy shares of Harmonic (HLIT – NASDAQ) at or under $10.50, good for the week. To limit your risk, place a protective stop loss at $5.50.
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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