With shares of Akamai Technologies (NASDAQ:AKAM) trading around $42, is AKAM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Akamai Technologies provides content delivery and cloud infrastructure services for the delivery of content and applications over the Internet. The company's solutions range from delivery of conventional content on websites, to tools that support the delivery and operation of cloud-based applications, to live and on-demand streaming video capabilities all designed to help its customers interact with people accessing the Internet from myriad devices and locations around the world.
The company offers five solutions designed to meet the online business needs of its customers: Terra, Aqua, Sola, Kona and Aura. Cloud computing and infrastructure are a relatively new technology that is being adopted by major companies at an increasing rate. This technology is still in its early stages of adoption in the United States and as companies worldwide begin to harness its power, Akamai Technologies stands to see explosive profits. Through its solutions, Akamai Technologies will continue to provide innovative products to businesses participating in a multitude of growing industries around the world.
T = Technicals on the Stock Chart are Strong
Akamai Technologies stock has seen a solid uptrend over the last couple of years. Currently, the stock is getting reading to see 52-week highs on positive earnings news. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Akamai Technologies is trading above its rising key averages which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of Akamai Technologies options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Akamai Technologies Options | 27% | 0% | 0% |
What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| May Options | Flat | Average |
| June Options | Flat | Average |
As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral to bullish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion…
E = Earnings Are Increasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Akamai Technologies’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Akamai Technologies look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | 24.39% | 14.40% | 17.39% | -4% |
| Revenue Growth (Y-O-Y) | 16.72% | 22.51% | 19.61% | 15.76% |
| Earnings Reaction | 19.42% | -15.19% | 6.72% | 24.03% |
Akamai Technologies has seen increasing earnings and revenue figures over the last four quarters. From these figures, the markets have been mostly pleased with Akamai Technologies’s recent earnings announcements.
P = Excellent Relative Performance Versus Peers and Sector
How has Akamai Technologies stock done relative to its peers, Level 3 Communications (NYSE:LVLT), Limelight Networks (NASDAQ:LLNW), Internap Network Services (NASDAQ:INAP), and sector?
| Akamai Technologies | Level 3 Communications | Limelight Networks | Internap Network Services | Sector | |
| Year-to-Date Return | 4.35% | -11.38% | -11.71% | 19.48% | 14.08% |
Akamai Technologies has been an average performer, year-to-date.
NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!Conclusion
Akamai Technologies provides technology products and services to a growing user base in a number of industries around the world. The stock has been performing well in recent years and looks to be getting ready to see higher prices. Earnings and revenue numbers have been shows excellent signs of growth which has really pleased investors. Relative to its strong peers and sector, Akamai Technologies has been an average year-to-date performer. Look for Akamai Technologies to continue to OUTPERFORM.
No comments:
Post a Comment