The development of e-commerce has provided the business community with new and exciting ways to reach the consumer, but there are associated dangers. There is an outfit in Sunnyvale, California that secures Web communications and accelerates business applications across the distributed enterprise.
Blue Coat Systems (NASDAQ: BCSI) helps organizations make the Web safe and productive for business. Blue Coat proxy appliances provide control of Web communications to protect against risks and inefficiencies from spyware, Web viruses, inappropriate Web surfing, instant messaging, video streaming and peer-to-peer file sharing. Blue Coat has installed more than 40,000 appliances worldwide. Customers include the National Institutes of Health, Merck (NYSE: MRK) and the US Air Force. Cisco Systems is a (NASDAQ: CSCO) is a major competitor.
The company surprised investors last week, when it reported fiscal Q1 EPS of 43 cents and revenues of $62.4 million.
Analysts had been expecting 35 cents and $58.8 million. Management also guided Q2 EPS to 43-50 cents (37 cent consensus) and Q2 revenues to $67-$70 million ($61.65 million consensus). The CEO said that the firm is in a very fast growing market and sees much growth potential. Roth Capital, Wedbush Morgan and Needham subsequently declared the stock a "buy." The stock popped on the news and then moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Altogether, brokers now recommend the shares with one "strong buy," five "buys" and two "holds." Analysts expect a 32% growth rate, through the next year. The BCSI Sales Growth rate (71.43%) compares favorably with industry, sector and S&P 500 averages. Institutional investors hold about 87% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $16.66 and $87.05. A stop-loss of $71.75 looks good here. Note that the company declared a two-for-one stock split earlier in the month. The issue will trade split adjusted on October 3.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
Comfort Zone Investing: The unmighty dollar
Five winners of a weak dollar
For a quick-read on the U.S. economy, check the price of gasoline
