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Aggressive Growth

While many are fearing EU-reliant stocks, Allot Communications Ltd. (ALLT - Snapshot Report) is on the rise and sees growing demand in the region. Is now a good time to pick up shares of ALLT?

Company Description

Allot offers IP optimization and revenue generation solutions for fixed and mobile service providers.

Another Great Quarter

Since we covered Allot back in early October, the company has reported another earnings surprise. On Nov 1 the company said it earned $0.11 per share in the previous quarter, 4 cents better than the analyst polled by Zacks was expecting.

Despite ongoing concerns in Europe, the company is still seeing strong carrier spending in the region, which accounts for 60% of its revenue.

Estimates on the Rise

The full-year estimate for 2011 is up 7 cents, to $0.35 after Allot's fifth consecutive earnings surprise. Next year's forecast rose 3 cents, to $0.41.

In 2010 the company brought in just $0.09 per share, putting this year's expected earnings growth rate at almost 300%. The 2012 projection is calling for 17%.

Valuations

While that P/E at 44 times forward estimates looks lofty, the PEG ratio is only 1.3 times. So the growth is at a decent price. Price to sales and price to book are both above 5 times, enough to scare away any value investor.

The Chart

Shares of ALLT have surged since the original feature, but a pullback here could make for another nice entry point. The market is a bit skittish right now, but this Zacks #1 Rank (Strong Buy) might be worth buying on the dip.

Read the October 3rd Feature Here

Allot Communications Ltd. - ticker ALLT >
 
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Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service

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