A look over the December performance in my portfolio tracked by "Globes" shows that the shares of three Israeli companies provided dreamy returns of three to more than six times the Nasdaq return of 6%.
When optimism is wall to wall, you have to think about selling shares that have reached records and an appropriate value, and today I am selling Allot. I did not dream it would return 175% when I brought it into the portfolio less than a year ago.
Allot is one of the leaders in the DPI field, which allows utilization of broadband more effectively by prioritizing customers. The upside which is still left in the share, which I may miss out on, is in the US market where Allot almost does not operate in at all today. This market is set to open this year for the first time to DPI players, after regulatory changes there, so I will get back into the stock if and when there is selling pressure.
The other two stars of December, Nova and Orbotech, are in my opinion still deep below their appropriate value, if we assume that 2011 will not be a recession year. Investment bank Roth Capital rates Nova a "Buy" with a target price of $10 per share, but I assume that this price will be raised again, and soon, if Nova's fourth quarter revenue is above the $25 million forecast by Roth, with an EPS estimate of $0.06.
It appears that Nova's order backlog rose significantly at the end of the year, if we rely on its recent announcements and on expected orders by its producer customers, especially in existing and new NAND production lines. In my opinion, the company's management, led by chairman Dr. Micha Brunstein and CEO Gabi Seligsohn, will broadcast a lot of optimism at an analysts' meeting to be held next Monday in New York, immediately after they are honored with opening Nasdaq trading.
Orbotech is one of four small company shares in the industry and technology sectors recommended to buy in 2011 by investment bank Needham. In Needham's opinion, 2011 will be better than 2010 in Orbotech's two main product lines, inspections of PCB (printed circuit board) and FPD (flat panel display). Regarding the PCB business, Needham says that its situation has not been this good in the past ten years.
Orbotech also has good visibility thanks to orders for new facilities to be built mainly in China, and Needham thinks that other analysts are mistaken if they forecast a drop in flat panel sales this year.
Published by Globes [online], Israel business news - www.globes-online.com - on January 4, 2011© Copyright of Globes Publisher Itonut (1983) Ltd. 2010. Republished on SeekingAlpha with full permission.