I confess that I’m not a serious day trader although I do keep one eye on the market, especially the networking sector. I’m always curious to see how the more focused companies like a NetScout or Cisco perform vs. umbrella technology companies like an IBM or HP. So here’s my foolish attempt to write a financial blog. It’s not quite what you’d expect from Motley, but you may find it interesting if you’re not exactly a market guru.
A great way to do a little stock trending analysis is via Google Finance. Just type in a company name or ticker and a nifty history chart appears. It allows you to slide a window back and forth to select a period of time, move your mouse along the line chart to display the exact date, and see the trade volume bar chart at the bottom. I think the coolest feature is the attachment of tags along the graph that reference financially related news at those exact dates. If you’ve never tried it, give it a shot and type in NTCT for NetScout and follow along. The figure below is the chart as of November 4th.
If you had put $2000 into NetScout back in May, it would be worth about $4000 today. Not a bad return for less than 6 months time. Sure beats my bank’s 4.872% (I made that up) CD for the same time period. Just for fun, let’s follow the chart along with the recent news, as indicated by the letters.
Letter I, May 3 – Revenues are up but net income is below analysts’ estimates by a couple of pennies. Oh rats, stock tanks shortly thereafter to $7.25.
Letter H, June 25 – The stock is now valued at $8.75 after a slow, upward climb of a buck and a half. Fifty cents of that increase came the day NetScout announces a “Raised Q1 Guidance.”
Letter G, July 25 –A mere month later a similar Q2 Guidance (that was a rather short quarter, no?) is issued adding another million to the revenue projection and the stock knee jerks to ten bucks before settling down into the low nines the remainder of the summer.
Letters C-F, September 20 – The Network General acquisition announcement generates some positive interest, kicking the stock up another buck or so.
Since then, it seems we’ve had lots of time to noodle the situation. The most recent news last week is that the acquisition is officially complete. My sources tell me that we’ll have to wait for the first round of real integration until April 1st of next year. Meanwhile, it’s status quo.
A number of people I’ve spoken to thought the deal was steal for NetScout at only $50m in real money, i.e. cash. Since then, the stock has see-sawed upward, peaking at nearly $15.50 on Halloween. Downright scary.
As an exercise to the student, try the same for Cisco and note how you could have doubled your investment albeit over a slightly longer period, one year. Still beats that CD.
Meanwhile, those that bought NetScout in the weeks prior to the announcement are laughing all the way to the bank. I wish I was one of them.