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[December 03, 2012]
Globes, Tel Aviv, Israel, Shlomi Cohen column [Globes, Tel Aviv, Israel]
(Globes (Tel Aviv) Via Acquire Media NewsEdge) Dec. 03--We shall soon bid farewell to 2012, which from beginning to end has been fraught with economic crises and geopolitical threats of one kind or another, most of them still unresolved. Despite the steep "wall of worry", the stock indices have managed to climb upwards, and it looks as though the year will produce pretty good returns. As the new year approaches, it's worth starting to examine which of the stocks for which 2012 was a lost year is likely to provide a pleasant surprise in 2013.
Today, I will focus on three Israeli stocks, in different technological niches, which in my view look attractive for next year, after failing to break through this year, each for its own unique reasons. The three are Radware Ltd. (Nasdaq: RDWR), ClickSoftware Technologies Ltd. (Nasdaq: CKSW), and Nova Measuring Instruments Ltd. (Nasdaq:NVMI; TASE:NVMI).
To judge from trading volumes, Radware is no longer on the radar of US investors, who have kept their distance from it after the peaks it broke following rumors two years ago that it would be sold. When load balancing is in the headlines, as it has been recently, following Cisco's (CSCO) abandonment of that niche, investors skip over Radware as though it didn't exist and chiefly remember the two market leaders, F5 (FFIV) and Citrix Systems (CTXS).
But Radware is alive and kicking, and not just in the traditional field of load balancing -- directly, and via Juniper (JNPR) and others -- but also in security solutions, which have become critical for every enterprise. Following an agreement signed in the summer, Radware enjoys close collaboration with Check Point Software Technologies Ltd. (Nasdaq: CHKP), which today sells Radware's solutions for preventing attacks, and even by the current quarter the revenue from that agreement should be substantial.
Some of the world's biggest online trading companies, reckoned as the leaders last Cyber Monday, rely on Radware security solutions. At a share price of $32, a market cap of $700 million, more than $250 million net cash, and projected earnings per share of over $2 next year, Radware today is a very good buy.
ClickSoftware -- the giants are interested Dealing with the mobility of workers in enterprises was something that ClickSoftware started to do long before Apple (AAPL) launched the iPad, which is today's ideal end-user device for ClickSoftware's solutions, making those solutions seem sexier for the enterprise. Altogether, the wide field of mobility has lately become a main target market for the giant software companies, such as Germany's SAP, which is a large ClickSoftware distributor.
ClickSoftware will cross the $100 million sales line this year, which is something that small software houses always find hard to do, and when they succeed, there is usually substantial acceleration in the years following. Analysts see the company approaching sales of $120 million next year, and the profit line should grow considerably, after being hit this year by high investment in research and development, as part of a strategic plan to enter new markets.
ClickSoftware currently has a market cap of $235 million, giving a sales multiple of around 2, which is low for a software company of its kind. It has more than $50 million net cash, and alongside a fall in development expenses its cash flow will accelerate, and earnings per share are expected to jump by 60 percent next year, to around $0.50.
Nova -- customers are boosting budgets The third recommended stock is Nova Measuring Instruments, in the semiconductor equipment field, currently traded at a low market cap of $200 million. Its sales are expected to rise above the $100 million line next year, it has nearly $100 million in cash, it is profitable, and it looks to me as though its market will return to growth in 2013. It is therefore one of the cheapest and most attractive Israeli stocks around today.
Among other things, Nova is a large provider of advanced metrology solutions to the world's biggest semiconductor contractor, TSMC (TSM) of Taiwan, which is the only one of the major semiconductor manufacturers to have announced substantial growth in its investment budget for next year. According to UBS, which monitors TSMC's announcements to the stock exchange in Taiwan, Nova has recently received orders from the company of around $17 million.
TSMC's huge investment budget, which will benefit Nova and others, is earmarked for increasing the production capacity of its 28 nano lines, mainly for mobile processors produced by Qualcomm, which has Apple as its largest customer.
In addition, next year, TSMC will invest in initial infrastructures for the next generation 20 nano lines -- and there are rumors that it will also prepare the infrastructure for making iPhone and iPad processors for Apple from 2014, processors that are currently produced by Apple's great rival Samsung.
___ (c)2012 the Globes (Tel Aviv, Israel) Visit the Globes (Tel Aviv, Israel) at www.globes.co.il/serveen/globes/nodeview.asp fid=942 Distributed by MCT Information Services
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