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Allot Communications Ltd.

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Allot Communications Ltd. (ALLT)

When you think about the internet, networks, bandwidth and mobile, Allot is one of the companies that probably not what comes to mind first, but their products and services play an integral part in how we are using all of them.

You also may have a distain for companies like ALLT because they are the folks who have the technology track, meter and somewhat enforce bandwidth consumption.  As consumers are surfing the web on their mobile devices, Allots’ solutions monitor, route and record details for providers like AT&T, Verizon and others to manage traffic per application, per subscriber, per cell, per service plan, and according to local network conditions.

As VOIP, streaming video and IM traffic grow, so does potential business for Allot.  “Deep packet inspection technology” or Allots’ “Dynamic Actionable Recognition Technology” (DART) allows carriers to pinpoint what programs and services being used by consumers are sucking up bandwidth.  Carriers in turn, can optimize networks and charge you for what you use.  They say it’s better for all, but at the end of the day, consumers’ usage is being capped and carriers are making more money, I wouldn’t say that’s balanced.

The days of wireless, unlimited bandwidth usage are going away (for the time being at least) and just about every American carrier has now moved to pay per usage platforms as opposed to flat fee for unlimited usage. 

Financials & Recent Developments
Allot is a small-cap (663 million mar-cap) based in Israel. Because the company is still small, its analyst coverage is limited to only 2.  In its most recent report, the company reported 12 cents per share in earnings compared to the Zacks Consensus estimate of 10 cents. 

The Israeli internet company saw year over year sales growth of almost 36% on $77.8 million in total 2011 sales and a Quarterly sales increase of roughly 10%.  They are currently trading at 45 times forward earnings.

Moving Forward
Earnings have finally moved into positive territory for ALLT. Expectations are for the company to earn 10 cents when they report quarterly earnings on May 8th (est). Analyst targets have been steady over the past month or so.  Zacks Analysts also rate the stock as a strong buy. 

For those who are open to more speculative investments, ALLT may be a company to watch.

Currently trading around $22.75 per share, ALLT has outpaced the S&P 500 by 37.5% over the past year and outperformed the broad market by over 20% in the past month alone. 

Volume is on the light side, but the stock remains firmly above its 50 and 200 day moving averages of $18.23 and $15.46 respectively.


This Week's Momentum Zacks Rank Buy Stocks:

Harley-Davidson, Inc. (HOG)
Harley created a lifestyle and in my mind, they were the original social network.  Harley owners and other bikers shared a common thread that transcended culture, social status, gender and ethnicity.   Over the past two decades, Harley has expanded its appeal beyond the middle class biker circles that made it famous.  Yuppies and younger, hipper, trendier buyers have stepped up and put a Harley in their garage.  If you look at the prices of their bikes and accessories, it’s a wonder that the middle class could ever afford one.  Many of their showrooms rival some of the most expensive automotive brands in the world in their layout, décor and technology.

But even with a favorable cultural shift, the past couple years have been a bit rough for the company.  Just recently they made cuts to their hourly workforce and shutdown one of their plants in Wauwatosa WI.  Earlier this month, after 50 years as head of styling, Willie G. Davidson, who is also the grandson of founder of William A Davidson, stepped down.

For a diehard Harley fan and owner like me, one has to wonder what the effect will be on the Harley lineup with Willie G. gone.  I think that they will not only continue to produce quality and consistency in their machines, but perhaps now will begin to explore some unique designs that are still true Harleys at heart.

Fads come and go, but Harley remains tried and true to its roots in many ways.  You may have a chopper, bobber or custom bike, but for most of us who ride, especially long distances; there is nothing like a Harley. I believe their international story is one to watch as is the fact that the “chopper” fads are fading, steering more customers to Harley’s new, aggressive designs. 


Cost Plus  (CPWM)
Cost Plus (aka World Market) operates 258 stores nationwide that offer an eclectic mix of everything from exotic (but economical) furnishings to cookware and foods from around the world.  

Last time CPWM hit the Zacks Rank #1 buy list on January 24, 2011 it was a $12 dollar stock;  fast forward less than two months and the shares are up 50%, now trading close to $18 after hitting a 5 year high of $18.66.

In January my focus was on World Market’s unique positioning, growth prospects and expansion. I also saw analysts moving their estimates higher ahead of the earnings report which can be one of the best indicators if a stock is going to maintain momentum.

All of these factors combined made CPWM a solid Zacks Rank Buy candidate.  The retailer delivered those anticipated bullish results on March 22nd, beating Zacks Consensus Estimates and sending shares higher.  The question now is whether this momentum can continue?


Anheuser-Busch InBev (BUD)
After pounding a couple pints of your favorite beer, the stresses of modern day society may seem just a little bit less severe.  Based on Anheuser-Busch InBev’s most recent earnings report and outlook, it seems that the world might be doing just that. It’s also the choice of much of the middle class and beer is, after all, the original social network.  (That’s what Anheuser-Busch InBev claims anyway).

According to the Beer Institute, (yes there is such a thing) sales of the hoppy beverage rose more than 2% globally in 2011.  Total sales for the year came in at $98 billion here in the US.   Americans are the global kings of beer consumption compared to wine and hard liquor. 

Nielsen research noted that the rise in sales revenue is coming largely in part by the high-end beer business. The sale of imports, crafts and above-premium beers sold “off-premises” was up nearly 3 percent.

It may be a good thing that “The King of Beers” joined forces with Inbev in 2008 because much of the growth is coming from “local” and “craft” specialty beers.  Some of the major US brands (like Bud Light, Coors and Miller) are actually losing market share as consumers’ tastes change.  Budweiser however has been gained some international love and so have shares of BUD.


Cabela's, Inc. (CAB
is on a roll. New store openings and a strong brand are pushing shares of this Zacks #1 Rank (Strong Buy) into new territory.

Cabela's is a specialty retailer of hunting, fishing, camping and outdoor merchandise. You may know it from its big log cabin stores. It operates 33 stores in the United States and 2 in Canada. The company also has a large mail order and Internet business.

Cabela's also issues Cabela’s CLUB Visa credit card, which is its primary customer loyalty program. It is operated through a wholly-owned subsidiary, World's Foremost Bank.


 Jared A Levy is the Momentum Stock Strategist for He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.


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