Sandvine Corp. (SVC.TO)

It is a good opportunity to get in at the moment. They have a $1/share in cash. It is a good entry point if you have a couple of years out. It could get taken out.

Always has a tough time with this because of very, very lumpy earnings. Just recently came off a couple of poor quarters, so valuation is certainly a lot cheaper than what it has been. Doesn’t see the catalysts in the short term. However, longer-term, this is a growth business. Their software helps different Internet service providers to throttle usage. This is going to be a huge business as we all continue to consume more data online, both with our mobile devices and as well as with wires. There is a future, but he is not convinced it is right now.

The earnings came in lower than expected. The sales pipeline is taking longer on these larger contracts. but the market will only be so patient. The debt is not excessive and they show up as good value, but pushing out contracts concerns him. It might get taken out and the cash flow is very attractive.

They pre-released the last quarter negatively but they now have an upgrade cycle. He has been buying more. The company is quite active at buying back shares.

A software company that helps manage and analyse traffic over the Internet. Make great margins and they are real innovators. The low $3’s is a very good buying opportunity. Have a lot of cash on the balance sheet. They regularly buy back their stock in the high $2’s, so you are sort of protected on the downside.

(A Top Pick Sept 12/14. Up 19.9%.) Traffic optimization on the Internet. If you need more broadband somewhere, they can manage the traffic. They also do deep packet inspection for the telcos. It is extremely well received outside of North America. He thinks the next step is for that to happen in North America, and this company is a leader.

Rates in the 1^st quartile in his strategy ranking. It does not pay a dividend. PE is a little high, but it has great free cash flow at about 7.8%. You don’t buy this for the dividend, you buy it for the increase in value. They have no debt.

He really likes this. They enable big cable companies to understand the type of data that is going across their networks (Deep Packet Inspection). In enabling the cable, telephone and Internet companies to understand what kind of data is going across their system, they can properly structure billing and deliver services. To him, any company that is able to help the big cable companies make more money is close to having a license to print money. Earnings have been lumpy, however he is enthusiastic about the general trend of the stock and the sector they are in.

(Market Call Minute.) An interesting area. Over the years he thinks it will probably continue to grow. They tend to be very lumpy with their quarters. If you can pick it up after a bad quarter and then sell it after a good quarter, you will probably do fairly well.

(A Top Pick July 30/14. Up 1.37%.) He still likes this story. They got to about $4.50 a few weeks ago, and then missed a quarter because some of the larger contracts they were going to sign got pushed into later quarters. Quarters are going to be lumpy, but if you look at it on today’s valuation, it is probably trading at about 11X ex-cash. He thinks at some point it gets taken out. It doesn’t trade at a crazy valuation.

A new position he added this year. He found it was very, very good value because the tech space was getting expensive. They had their growing pains but they seem to be the leader now. They are sitting on a pile of cash. The stock corrected because it is a lumpy business. He is currently buying it at these levels. It is a great entry point. Great free cash flow generator and a great management team.

This is a very strong company. It has a brilliant balance sheet. It is very powerful. The less than good news is that it had a decent run up and got ahead of its current fair market value based on earnings estimates. He shows a 5% downside risk. It is close to some pretty good technical support at $3.90 to $4.00. We can see this company getting into gear again.

They have always liked to have cash on the balance sheet. The whole Internet traffic cop thing has been solved at least in the US. He would like to see them do an acquisition. You want to grow quickly if you are a technology company. It is a good, well managed company.

They had a decent move and are not cheap. He has not sold any shares yet. It has worked out quite nicely in their portfolio. He thinks it could go to a double. There is a lot of liquidity that is trapped. If money moves into growth stocks, then this one could really benefit. He really needs to see the back of the bond yield to go up for that to happen. It is at a record high right now.

He likes this and thinks it is pretty interesting here. It has been kind of flat-lining here recently because of the FCC decision on Net Neutrality which was against what this company’s product tries to achieve for carriers, i.e. to differentiate the packets and allow for different speeds and different access for different data streams. They also have a wireless side which is growing fast. Have an upgrade cycle going on right now that is pretty positive. Would look to buy on a pullback, or if the fundamentals materially improve.