China Techfaith Wireless Communication Technology (NASDAQ: CNTF) is
a mobile handset maker in the People's Republic of China. Products include smart phones, feature phones, wireless modules, data cards, printed circuit boards and wireless software. Services involve hardware design, component selection, sourcing, prototype testing, pilot production and production support. The firm creates sets for platforms developed by Philips (NYSE: PHG), Texas Instruments (NYSE: TXN) and Skyworks Solutions (NASDAQ: SWKS). Customers include leading Chinese and international mobile handset brand owners.
The firm pleased investors last week, when it reported Q4 EPS of seven cents and revenues of $45.7 million. Analysts had been expecting four cents and $43.3 million. Management also guided Q1 revenues to $48-$49 million ($42.86M consensus) and disclosed plans to work with Google (NASDAQ: GOOG) to develop a phone based on that firm's Android operating system.
The CNTF share
price popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the shares with one "strong buy", two "buys", two "holds" and one "underperform". Analysts see a 65% growth rate, through the next year. The CNTF Price to Sales ratio (1.78), Price to Book ratio (1.49), Sales Growth rate (56.83%) and EPS Growth rate (-0.09 to +0.07 yr/yr) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 20% of the outstanding shares. Over the past 52 weeks, the stock has traded between $3.40 and $9.98. A stop-loss of $5.00 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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