Undervalued Small Cap With a Bullish Chart Pattern: CNTF
Feb 27, 2008 Small Cap Stock Picks
Small Cap Stock Pick: CNTF
CNTF made a strong run today breaking out of its bearish descending channel on news of strong earnings and a positive forward outlook. Quoting a PR from yahoo finance.
“The company’s smartphone business nearly doubled sequentially and was well above our projections due to robust demand for dual-mode smartphones,” Jefferies & Co. analyst Brian White wrote in a note to investors. He rates the stock “Buy.”Techfaith also disclosed plans to work with Google Inc. to develop a phone based on the online search leader’s Android operating system.
The company earned $3.2 million, or 7 cents per share, up from a loss of $6.7 million, or 15 cents per share, in the same period a year ago.”
CNTF has a significantly low forward P/E of just 9x earnings compared to the communications services industry average of 23x earnings. With Estimates around .66 forward earnings this gives CNTF a fair future value within its industry of .66 x 23 = $15.18/ share compared to todays closing price of just 6.21 leaving room for a 144% gain from here to be faily valued within its industry. This undervaluation and momentum on the chart gives us a great setup for a short term trade. Price is unsteady at the moment so i don’t have a full out plan for buying just quite yet. But rest assured im watching this closely and you should be too!
Technical Analysis:
