3 Tech Stocks That Soared Last Week

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VirnetX, Universal Display, and Ambarella soared in a generally quiet market week. Here's how.

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3 Tech Stocks That Soared Last Week

  1. 1. 3 Tech Stocks That Soared Last Week
  2. 2. These 3 tech tickers beat the market, June 23 – June 27
  3. 3. VirnetX gained 7.3%, thanks to a big Tuesday surge.
  4. 4. The big move: • VirnetX enjoyed a massive volume spike on Tuesday morning. • In the span of just one hour, more than twice the stock’s average daily volume had shifted hands, driving share prices drastically higher. • Somebody is creating a big position in VirnetX right here, or adding to an existing one. • The stock is a popular component in small-cap and growth mutual funds. • Still, only 55% of VirnetX’s float is held by insiders and institutions, leaving a large portion in the hands of retail investors.
  5. 5. Okay, but why the big buy-in? • This surge appears to be a delayed reaction to an earlier favorable patent review decision. • The U.S. Patent and Trademark Office denied all seven petitions by RPX Corporation to review four of VirnetX’s wireless security patents. • The USPTO noted that Apple is a common denominator between all of RPX’s review filings, being sued for using all of the relevant patents. • Apple’s own petitions have already been denied. Using middle- men to try again is a big no-no. • Moreover, the time limits for starting these patent reviews have already expired.
  6. 6. The big VirnetX takeaway: • Apple lost one effective tool in the VirnetX patent battles, but the appeals process continues. • The stakes are high, as VirnetX seeks billion-dollar payouts but is not likely to survive if the legal tide turns against the company. • The final outcome of Apple’s defense will be cited and followed in other patent conflicts. This battle is setting the tone for the entire war. • Right now, VirnetX looks like a winner. The question is, how far will Apple push its legal options? This is the kind of bellwether conflict that can go all the way to the Supreme Court. • VirnetX is sitting pretty right now but the stock remains risky. Investors are betting on a long string of perfect outcomes, none of which are guaranteed. • One bad day in court could bring the whole enterprise to its knees. Please be careful with this poker chip of a stock.
  7. 7. Ambarella surged sky-high on Tuesday. The excitement faded a bit, but the stock still had a great week.
  8. 8. What happened on Tuesday? • Ambarella makes the video processing chips at the heart of GoPro cameras. • GoPro’s wild IPO also drove huge interest in Ambarella and other stocks with GoPro connections. • Moreover, Google just bought Dropcam. The video camera space is simply red-hot right now, which is great news for components suppliers like Ambarella.
  9. 9. There’s more to the Ambarella story • Ambarella might sound like a flash in the pan, but don’t write it off too quickly. • The company is showing positive earnings and cash flows, along with 20% annual sales growth. • On Ambarella’s balance sheet, you’ll find $156 million of cash reserves but no debt. • GoPro may be the richest feather in Ambarella’s cap, but the company is set up to thrive even if its target market sags for a while.
  10. 10. Finally, Universal Display gained 6.3% for the week. That includes an 8% jump on Friday.
  11. 11. Universal Display’s catalyst • Universal Display rose as big-name analyst firm Goldman Sachs reiterated its “buy” rating on the stock. • Goldman analyst Brian Lee also raised his target price from $42 to $44 per share. • The stock currently trades near $31.25, including the analyst note’s self-fulfilling prophecy powers, leaving lots of growth to do before hitting Goldman’s new target.
  12. 12. What does Goldman see in this stock? “We believe OLED is one the more underappreciated product cycle stories in our coverage, with new product and customer-driven catalysts lining up to drive stock outperformance [in the second half of 2014].” said Lee. He likes Universal Display’s product pipeline, but the stock is also positioned for big gains in the near term. Lee provided 3 main reasons why: • Investor sentiment is too negative on this stock. • Shares are attractively valued today. • As the market for OLED product moves into the mainstream, Universal Display is executing crisply on new business opportunities.
  13. 13. Apple hopes to sell millions of iWatches… but not without this small-cap components supplier.

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