Logitech's shares are headed north

Posted Nov 3rd 2009 2:00PM by Joseph Lazzaro
Filed under: Stocks to Buy

Institutional Investors are acting as forecast with Logitech International SA (NASDAQ: LOGI): they're piling into the shares, hence, I'm Reiterating my Buy rating for the company, first recommended on April 13, 2009 at a price of $11.40. If you bought LOGI in April, you're up an impressive 52%.

Investors are looking right past FY2010's revenue decline, to a likely 15-20% increase in FY2011, on the continued recovery in PC sales. Logitech is a world leader in leveraging its ergonomic and tech-advancing research across multiple platforms: keyboards, mice, game consoles, headsets, speakers, and remote controls, among others. Hence, almost any positive data points for desktop computers causes Logitech's shares to move north.

Trendsetter Logitech has other competitive advantages, including: multiple price points, rigorous cost containment, and outstanding supply chain management. Cost containment was aided by 10% staff reduction earlier this year. The First Call FY2010/FY2011 EPS estimates for LOGI are 31 cents to 87 cents.

Technically, Logitech's stock chart is strong: an uptrend, and a recent pull-back from about $19.70 represents a Buy opportunity. There will be psychological and 52-week resistance $20, but in the long-term scheme of things, this will represent a minor hurdle: LOGI is head much higher.

Stock Analysis: Logitech International SA is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in LOGI now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your LOGI position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $6.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: LOGI, Logitech International