SONS long term

[Gwhiz]

http://finance.yahoo.com/q?s=sons

looks like a long term play worth examining.

VoIP is a rapidly growing industry, rapidly growing profits, VERY UNDERVALUED

nothing exciting necessarily going to happen for a little while, but in the long term looks like it could be a homerun.

[peanuts]

http://finance.yahoo.com/q?s=sons
looks like a long term play worth examining.

VoIP is a rapidly growing industry, rapidly growing profits, VERY UNDERVALUED

nothing exciting necessarily going to happen for a little while, but in the long term looks like it could be a homerun.

With a mkt cap of 1.14 Billion, and an enterprise value of 857 Million, with negative free cash flow of 1.17 Million, could you please explain why this is "VERY UNDERVALUED"?

Do you have any growth projections for VOIP over the next 1, 5, and 10 years? How will the growth in VOIP affect SONS?

Why are they diliquent in their filings?

Thanks for the help.

[DSteckler]

could you please explain why this is "VERY UNDERVALUED"?

I guess someone knows more than you do about it?

[peanuts]

I guess someone knows more than you do about it?

I don't know much about it, others than numbers. If I had some meat to chew on, maybe I'd be able to form an opinion.

[skiracer]

I don't know much about it, others than numbers. If I had some meat to chew on, maybe I'd be able to form an opinion.

I think that taking the time to investigate a possible play falls on the shoulders of us as traders. It is nice when the poster provides more info but it's the inquisitive mind that will spend the time it takes to look into it. Here's a couple of things about SONS that might be appealling.



Institutional ownership has increased significantly and is up 35 mil. shares over the past couple of months.

[peanuts]

I think that taking the time to investigate a possible play falls on the shoulders of us as traders. It is nice when the poster provides more info but it's the inquisitive mind that will spend the time it takes to look into it. Here's a couple of things about SONS that might be appealling.

Institutional ownership has increased significantly and is up 35 mil. shares over the past couple of months.

The play you described looks tempting right now based on the TA. If 5.6 is the target, would you add to the position on its way up from your entry at 4.5?

Gwhiz says that this is a long term play, however. To me that is 1+ years. If I'm looking at a stock as a LT investment, then I want to know what the company has in terms of growth prospects internally and externally. Is the industry in which it participates growing, or is the company the best within the industry? Where is the growth coming from? In this case, it is VOIP. What are the industry growth prospects, and how will SONS capitalize on it? I don't know the company that well, or the industry, so I'd like to get some background info before I can project a future valuation.

Short term, I think you might be able to play it, Ski. Are you going to trade the plan?

[Runner]

I would not select SONS as a candidate for a swing trade and here is why. I do not like the character of this stock. I can’t simply find clear lines of support and resistance here. Zoom in on your chart and notice it took out the 4.54 are and then came right back in. The chart is just all over the place. Not sure if it is heavily driven by news events or what.
One positive I see in the daily is the last gap up. I view this as a sign of power.

Ski, thanks for sharing a possible plan!!



Long term off a monthly I think 2.86 needs to hold. It also may be forming a triangle on the monthly. If this one is a winner it will offer many more entries IMO.

[Gwhiz]

VoIP is one of the fastest growing industries today, it is catching on especially quickly in Japana and Europe, and SONS has the largest slice of market share in the market for the equipment that facilitates VoIP. SONS is like cisco was in the 90's, providing the hardware that the growing system runs on. The negative free cash flow is a result of massive investment in the future of VoIP. As for the enterprise value, it is surprising that SONS' market cap is not double it's enterprise value.

[skiracer]

I would not select SONS as a candidate for a swing trade and here is why. I do not like the character of this stock. I can’t simply find clear lines of support and resistance here. Zoom in on your chart and notice it took out the 4.54 are and then came right back in. The chart is just all over the place. Not sure if it is heavily driven by news events or what.
One positive I see in the daily is the last gap up. I view this as a sign of power.

Ski, thanks for sharing a possible plan!!



Long term off a monthly I think 2.86 needs to hold. It also may be forming a triangle on the monthly. If this one is a winner it will offer many more entries IMO.

Runner,
All good thoughts. I agree with your take on the chart. Would you agree with my seeing a symetrical triangle forming there, although with a few gaps within the top and bottom lines that could be filled either way. What I like here is that the last candles were to the down side of the boundary line of the triangle. I'm looking for a move up from there and a possible breakout above the top boundary line. It has recently cleared resistance at both the ema 20 and 50 ma. I like that if it holds. I would also like to see it break resistance at the 200 ma. If it does that I would feel much more comfortable with the percentages of it moving further up to match recent highs.
So I'm not sure yet but it does appear to be showing strength to me.
I like it more than I don't like it.

Peanuts,
I wouldn't be looking to take this long because it doesn't interest me to look for that type of play with this type of stock. The thing that interests me is the big buildup in institutional support over the past few months. 35 mil. shares. Somebody has been accumulating it on a large scale. It could be hedge funds or mutual funds. If mutual funds then they would be holding the positions longer term as opposed to the hedgies who could dump it all tomorrow. I like the chart right now and the risk vs reward isn't bad in my opinion. I normally don't add to positions on the way up. My first buy is my buy and that is usually it with the swing trades. I agree with your comments about the long term reasons for holding. I know very little about VOIP and that industry or where it is going so to hold it over the long term I would need to know more about the industry and the stock.
I will be watching SONS on Monday at the open an if it moves up from the open and after !0 am it is holding the move up I would definitely consider taking a position and looking for a 1 point move up with a stop at $4.20 area. I'm intrigued by the institutional buildup. They always know something that we don't. 1000 shares here at $4.50 looking for a point vs. a .30 stop loss isn't too bad a trade. I always weigh the risk vs the expected gain. Remember that if you think a setup is good and the chart is saying that it looks good to move up then you probably should make the play but only according to your plan. If it goes in the opposite direction then honoring the stop is the only thing you can do and take the loss of $300 and look for another play. If you don't play then you aren't in the game. But we came to play right so we just have to make the plays and the edges in our favor and protect ourselves as best we can. I'm glad to see that you survived your birthday yesterday. Driving while under the influence of anything is always risky.

[New-born baby]

Good Discussion

Ski, Runner, Peanuts, et al:
Good discussion on this stock. Ski: thanks for the trading plan. Runner: thanks for the civil disagreement. This is MM forum at its best: a proposed stock and trading plan, and disagreement without being disagreeable.

Here's the weekly for the life of the stock: it has flat lined it for about five years. I wish an Elliott wave trader would count the waves for us

[New-born baby]

SONS (cont.)

Here's the weekly, and I have to say that if you take it here you are buying a stock that is under its 200 day--voted the most reliable indicator--and under its 50 day, and sitting on its 10 day, but barely. Those are not generally bullish indicators. The PnF likes it to $9.25. Go figure.

[skiracer]

NBB,
When it's like this it is at it's best. Good discussion. If you look at the daily I put up real close Stockcharts has the ma 50 at $4.46, the ma 200 at $4.58, and the ema 20 , which is my favorite of the three for short term swing trading an I got from Dave Steckler although not personally but from one of his posts, at $4.48. I agree that this could be termed a critical point between support and resistance. The support not to strong at just below Friday's close and the resistance at the 200. It get's down to gut feelings and risk vs reward for me in these situations. Who knows which way it will go Monday am. I really do like it for an upside short term move in the direction of the current momentum. Supply may be somewhat exhausted at this point also which would be a help. This is one of those trades that you don't necessarily have to make but that look good for a short term move. This is why honoring those stops is so important. Right now I think the momentum is moving somewhat strongly upward however if the market in general is in the crapper on Monday then the chances are that it won't move up. That's another reason for not trading before 10 am to see the moves an if they hold.
And NB, when that PnF chart is giving off the signal that agrees with your view you make it a little more significant in your analysis. As a reliable and well used tool in your arsenal please give it the same consideration as when it's in line with your view just to be fair. And just to be fair I'm using some of Spike's fuzzy logic in leaning towards using the upper of the two bottom lines of my symetrical triangle. It looks like a better triangle that way in my analysis.

[Runner]

Ski, your plan is feasible to me with about a 15K account and risk of 2%. Here is the numbers as I see it.

Max shares – commissions 993
R/R 1.6 (above 1.0)
Cost of Trade – commission 4,470.50
Potential Loss –299.90 (MAX –300)
Potential Profit @ 5.00 target +495.50
Entry to target (4.50) 11.11%
Entry to stop(4.20) –6.67%

I think you have defined a plan and my assumptions are just taken from the info I’ve read off your chart. I do agree on a triangle but I’m not certain if ascending or not. Should you pull the trigger I wish you the best. My calculations of course are just fictitious and does not by any means try to imply what one should or should not do.

Oh check this out if in fact 5.50 target got hit your R/R would jump to 3.3 and profit of 991.00 and entry to target of 22.22%. Now that would be a nice trade off with a risk of 300.00 would you agree?

[skiracer]

Ski, your plan is feasible to me with about a 15K account and risk of 2%. Here is the numbers as I see it.

Max shares – commissions 993
R/R 1.6 (above 1.0)
Cost of Trade – commission 4,470.50
Potential Loss –299.90 (MAX –300)
Potential Profit @ 5.00 target +495.50
Entry to target (4.50) 11.11%
Entry to stop(4.20) –6.67%

I think you have defined a plan and my assumptions are just taken from the info I’ve read off your chart. I do agree on a triangle but I’m not certain if ascending or not. Should you pull the trigger I wish you the best. My calculations of course are just fictitious and does not by any means try to imply what one should or should not do.

Oh check this out if in fact 5.50 target got hit your R/R would jump to 3.3 and profit of 991.00 and entry to target of 22.22%. Now that would be a nice trade off with a risk of 300.00 would you agree?

Runner,
Those were my numbers (targets) exactly. 1000 shares @ $4.50: $300 max. loss at $4.20 stop =6.67 % stop loss: target of $5.50 = 1 point gain =22.2 %: 6.67/22.2 =r/r of 3:1+- I can live with these numbers, especially since the $4.20 stop loss exit coincides almost exactly with my normal stop loss %. Also this stop loss % fits right into my parameters for r/r. Of course it has to hit the target which is easier said than done. I like the upward momo on this stock right now. But I still have to seen what transpires on Monday morning.
Definitely not an ascending triangle formation. I was seeing a symetrical triangle.

[New-born baby]

Ski, Runner

Good posts, men. I love it!!!!

Now Ski, tell me about the 20 day ema. How do you use it to trade? Thanks!
Oh yeah, about the PnF: it disagrees with me. It says $9.25 target; I say I don't think SONS is ready to take a long. But I know the PnF is a lagging indicator most often.