Out Fox The $treet

Yext (YEXT) is quickly becoming one of the best ways to play AI powered services. The small tech stock has been a solid buy on dips to $12 since going public about a year ago.

Bernstein Research provided a compelling list of prospects in the software area that could become merger and acquisition targets. The research firm has provided a list of fast growing software stocks over the years that have a high level of buyouts. Analyst Toni Sacconaghi provides an interesting case for why hardware companies might be interested in these software players. Amazingly Millennial Media is listed as the fast growing stock over more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After a disappointing year it appears that Baidu (BIDU) is finally waking up. The stock has been in a major downtrend since peaking last April over $150. The stock has been a favorite of Stone Fox Capital over the last couple of months as the it dropped below $90. It currently trades at only 16x greatly reduced forward estimates. With the China internet sector still in the early days, investors can purchase the preeminent search engine in that massive country on the cheap. For comparative purposes, BIDU is worth only $36B while Google (GOOG) now approaches $300B. No doubt should exist that BIDU will approach the valuations of GOOG as the China internet market grows up. Disclosure: Long BIDU. Please review the disclaimer page for more details. 

A lot is made about the cash balances at Apple ( AAPL ) . In fact a recent article talked about the cash balances not being the $137B (see Apple Does Not Have $137B In Cash ) normally used by analysts. The point of the article was that Apple doesn't actually have $137B in cash, but rather the amount is in other assets such as long-term marketable securities that accounts for the majority of the $137B thought to be cash. Instead of dissecting whether the company has the cash invested into short-term and long-term securities (more on that later), the more important discussion is counting up the billions coming in the door. Apple is generating so much cash on a monthly basis that it could double the dividend without needing to worry whether the long-term securities are invested in durations of 1 year or 3 - 5 year investments. Read the full article at Seeking Alpha. Disclosure: Long AAPL. Please review the disclaimer page for more details. 

Last week, both Palo Alto Networks ( PANW ) and Splunk ( SPLK ) released earnings for the quarter ending January that saw massive revenue growth. While both stocks had hot IPOs in 2012 and trade at what are generally considered expensive multiples, they had different reactions after their respective earnings reports. Palo Alto is a leading network security provider that competes against the likes of Cisco Systems ( CSCO ) and Juniper Networks ( JNPR ) , while Splunk is a provider of real-time data analysis commonly referred to as "Big Data." Palo Alto is more focused on taking market share, while Splunk is creating a whole new market. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After years of weak stock returns and strong cash flow generation, tech stocks have become the new high yielding asset class. In the old days, tech stocks didn’t even pay dividends, but now investors can find a solid selection of high yielding tech stocks. Even the great Apple now provides a dividend yield in excess of 2%. The following high yielding tech stocks all provide yields in excess of more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

As Riverbed Technology (RVBD) cratered to a new 52 week low on Wednesday, analysts were battling over the future of the company's main market. Several analysts, including Jefferies, see the main WAN Optimization market of Riverbed mostly tapped out, while Needham sees 20% growth in the next 3-5 years. Why such a divergence in opinion? It all stems from whether the recent product transition is seen as a move leading to favorable dynamic in the second half of 2012 or an excuse for weak results. See previous article on the Q112 results, conference call highlights, and new products launched. Positive Recap To recap, Riverbed is a leading networking equipment provider that recently launched a host of new products. Management categorically denied the mature market theory suggesting that the market could be 10x the size of all the products previously sold. It also denied any loss of market share as the 3rd vendor has recently pulled back from the market and Cisco Systems (CSCO) appears ...

Splunk ( SPLK ) reported earnings after the close Thursday that easily beat analyst estimates. The stock though plunged down 16% on Friday. Whether this was due to the weak market or disappointment that the company didn't guide even higher is difficult to determine. Either way it shows the difficulties of owning high valuation IPOs going into the first earnings report. Previously hot IPOs such as Jive Software ( JIVE ) , Millennial Media ( MM ) and even InvenSense ( INVN ) plunged after disappointing earnings reports. Clearly investors expected too much out of these stocks as even 80% revenue growth for Splunk wasn't enough to keep the stock higher. All of the previously mentioned stocks have collapsed roughly 50% from post IPO highs, so the downside risk in Splunk could be substantial. A similar drop would be another $9 for the stock. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more ...

At one point today, OCZ Technology (OCZ) was down more than 5% to below $7 before a massive end of day rally. This stock has been a major conundrum since completing a secondary at $9 to raise over $100M. The stock even hit $10 around that time. Even worse is that the market has been consistently rising during that period. Management had previously hinted that if the company needed to raise cash it would be due to significant orders that required more cash for operations. Absent any big deal announcement since the secondary, it appears that investors have become disenchanted with this story. Analysts expect the company to have wrapped up nearly 100% revenue growth for FY'12 and follow that up with a 35% revenue growth for FY'13. The stock currently trades at a 13 forward PE though the 5 year growth rate is over 22%. That number even appears low considering the growth rate. On the technicals, the stock closed right around the 200ma. Being so oversold, the stock is due for ...

Just about every stock segment I caught on Friday and over the weekend talked about the tech sector being very extended. The talk is of massive gains that reach bubble levels. The Nasdaq Composite hit 11 year highs so clearly it must be time to sell. Or is it? When finally taking a closer look at the Technology SPDR Select ETF (XLK), I'm actually dumfounded by all the pessimism. Sure the XLF has hit new highs. Sure the RSI and CCI are both showing an ETF that is overbought. Though I wonder about the accuracy of those measurements or the immediacy of the negative outcome. First, the index is only at $27.72 after first reaching over $26.50 back in mid February 2011 so over a year ago. Second, not more than 2 months ago the index was at $26.50 again. Third, the index hit similar overbought numbers in October 2010 and continued rallying the next couple of weeks prior to a shallow pull back and another 3 month run. Facing a similar run as Sept 2010 though Feb 2011 one would have...

nteresting comments this week from both Cody Willard and James Altucher that Apple ( AAPL ) could be worth $1 Trillion if not $2 Trillion in the future. While this might seem like crazy 2000 internet bubble like forecasts, its refreshing to see investors willing to discuss the potential of the greatest retail/tech stock in the world. Not to mention as the market heads to record earnings, it should also see companies with record market caps. At some point it was crazy to think a company could be worth $100B so its inevitable that somebody will hit $1T and AAPL is the likely winner. As I recently wrote , the market continues to give AAPL a very cheap valuation compared to its growth rate. Most analysts continue to give them valuations x amount above the current price in the $340 range. They throw out $400-500 targets even though it gives AAPL an unreasonably cheap valuation. They never seem capable of forecasting a value other then based on the current value whether expensive or cheap,...

Limelight Networks ( LLNW ) is a leading content delivery network provider sometimes seen as a sexy play on the explosive growth of mobile and connected devices and the move into the cloud. The company recently reported Q1 numbers that showed incredible revenue growth with over 100% growth in mobile internet and tablet computing revenue, online video platform, and site and application acceleration services. Read the full story at Seeking Alpha .  Disclosure: No position in LLNW. Please review the Disclaimer page. 

Yet   another   quarter   has   passed   and   nearly   all   of   the   analyst   and   media  discussions   have   focused   on   whether   Apple  ( AAPL )  met   earnings  estimates . Beyond  that,   these   experts   have   focused   on   the   amount   of  iPads   sold with mind numbing focus on that particular estimate miss . Not much of the focus has been on AAPL beating earnings estimates by a mile, or more importantly, the growth rate. Just imagine how fantastically good earnings will be with ramped up production of iPads. Does anybody really doubt the growth path for the iPad regardless of any issue in Q1? Read the full article at Seeking Alpha . 

After a few months of weakness since the  disappointing guidance  of F5 Networks ( FFIV ) back in mid January, most of the networking cloud stocks have been under pressure. It tends to be a normal pattern for new disruptive services to go through extreme highs followed by lows that shake out longs. The pattern will repeat several times over the next couple of years as cloud computing becomes mainstream. FFIV is now down 35% from its highs back in January. Have the future prospects really changed that much? Read the rest of the article on Seeking Alpha .  Disclosure: Long RVBD and RDWR. Please read the disclaimer page. 

Great guidance from Riverbed Tech (RVBD) after the close today. The stock has been completely hammered the last couple of weeks with a whopping 6.5% drop today. Apparently this was enough to cause management to rush out the numbers for Q1. Not sure why the market continues to think that RVBD will miss estimates. This company provides a best of breed network optimization product that reduces network costs. Tomorrow should be a great day for the stock as they continue to produce record results though the stock was down 30% from recent highs. Tomorrow should be the start of a good run. RVBD will top street highs with that $.20 estimate. The 2012 top estimate is $1.44. Using that estimate that is completely achievable based on todays results, RVBD was only trading at 21.5x earnings. Note below that earnings just double for Q1 '11 and the PEG on RVBD is remarkably low. 5:40PM Riverbed Technology sees Q1 revs of $163-164 mln vs $160.1 mln Thomson Reuters consensus, sees Non-GAAP E...

Kevin Landis is one of the well known Portfolio Managers still around from the dot com error. He was well respected in the investment world up until the crash. His funds also highlight the issues with being a sector driven PM. Nice when your sector is soaring but horrible when the boom turns too bust. Barons did a nice write up on him and his funds. Lately Landis has put up some impressive results and based on history it's worth reviewing his picks. He is well known for investing in leading edge technologies. Unfortunately if you aren't careful such investments can quickly turn into bleeding edge. Those investment tend to bleed you dry before paying out.The combination of the valuations in some tech stocks and the fact that he is starting to get press makes me wonder about a topping action in tech. Unlikely yet, but worth watching. Landis has easily outperformed the sector and SP500 over the last 1, 3, and 5 years, but once you go back 10 years his record runs into the 200...

In the middle of last week, technology stocks seemed about to become technically broken. A lot of the stocks we follow had broken major technical support and were in danger of serious damage. As of this afternoon, the following stocks we own in the Opportunistic and Growth Portfolios turned very bullish. Each one has now cleared the 20/50/200EMAs. Of course, it helps that the SP500 cleared the 200MA which is very bullish, but the tech sector seems ready to lead the market highers. These stocks have strong balance sheets and hence avoid any of the issues regarding debt concerns and funding. Instead they can focus on the strong growth in the developing economics and a rebound in the US. They all have some overhead resistance and still need to prove they can clear recent tops before the all clear is sounded. Riverbed Technology (RVBD) - strong WAN optimization company that got upgraded yesterday with a $32 target. Not a big jump from these levels but this company continues to preform at ...

After a decade of extreme negativity for tech stocks, it shouldn't be that surprising that some stocks in the sector have PE multiples unheard of for the sector. After a decade where a typical tech stock fell some 90% from their 2000 peaks, why would investors pile into them regardless of their earnings? After all, why not buy commodity and energy stocks that have been all the craze for the last 5 years. Teradyne (TER) is one such example trading on Friday's close at just 8x 2010 estimates and 5.5x the upper end of 2011 estimates. The stock is down some 85% from its 2000 peak around $100. What could the stock offer investors that were so burned by holding in the early 2000s? For starters, its gone almost unnoticed that TER just reported the highest semiconductor related orders in 10 years. Heck, Stone Fox Capital has been allocated some 20% into tech stocks like Apple (AAPL) and Riverbed Systems (RVBD), but we've mostly ignored the spaces such as semiconductors or communic...