Company | Ticker | Percentage | Shares Traded | Current Price |
Sirius XM Radio | (SIRI) | Fell 0.5% | 67,647,200 | $2.18 |
Level 3 Communication | (LVLT) | Rose 1.6% | 22,311,400 | $2.48 |
Oracle Corp | (ORCL) | Unchanged | 21,318,400 | $33.06 |
Level 3 Communications - Price Target $3.00
I know my friend CarlK is going to say that I’m being a narcissist; he was kind enough to share an article with me yesterday regarding NetFlix's announcement to enter in Latin America. Not only is this great news for NetFlix, but several weeks back (June 23) I suggested how it would also be great news for Level 3; in which the following points were made:
- I became immersed with thoughts of increased bandwidth capacity and ways the company could leverage its network and lease out its lines to content providers such as NetFlix (NFLX) and Apple (AAPL).
- With future cloud demand, one has to realize that a market exists for the services that Level 3 offers. With Global Crossing on board, the combined companies will be able to do some great things. I remain intrigued by CDNs or "content delivery networks" such as Level 3 who will be well positioned to provide the type of optimal network and bandwidth access that both business customers and well as consumers will demand from content locations such as Apple’s (AAPL) iCloud, NetFlix as well as the potpourri of services provided by Amazon (AMZN).
- One of my concerns with Level 3 has been their debt. This concern will be mitigated upon the closing of the Global Crossing (GLBC) acquisition. The other main concern has been their inability to raise margins. Clearly upon the NetFlix announcement, Level 3 and its network will be a highly coveted bandwidth provider who will be able to sell their lines to not only NetFlix, but also to Amazon, Google (GOOG), Appleas well as Hulu and FaceBook; pretty much anyone who will be competing for content delivery dollars. Level 3 investors are in a nice spot and to Level 3’s management, I can only say well done!
Oracle - Price Target $40
Since bottoming out at $30.65 Oracle investors are once again rejoicing with the stock now up 8% to $33.06. Last week, I asked what is wrong with Oracle? Clearly the answer is nothing. We discussed previously about Oracles’ leading business applications and leading database software solutions services; a part of their portfolio of offerings that continue to acquire market share each quarter.
They will continue to face much stronger demand for their products, particularly with its increasing integration in business software, hardware, platforms and use. As I noted previously, they have specifically targeted both Hewlett-Packard and IBM among their biggest rivals and it appears to be a race they are suited to win.
Being a dominant tech player is at the top of every Oracle mission. So far this year they have not disappointed. At $33 per share, the stock remains incredibly cheap and I continue to have confidence that the stock will reach $40 by the end of the year.
Sirius XM Radio - Price Target $2.75
Sirius investors were a bit disappointed yesterday as the stock closed down 1 penny. It’s remarkable what a difference a week makes. After the stock reached $1.86 several weeks ago, losing a penny in one session would have been considered a “win.” But since hitting the $1.86 low and then climbing to as high as $2.25 for a 21% gain, I think this a raised investor expectations considerably; and understandably so.
From a momentum perspective, investors believe the stock should continue to go up. Why wouldn’t they? But the truth is, that is just not possible. I have received questions from commentors wondering, “What does it mean for Sirius that it closed below the open yesterday”? This is a fair question. As disappointing as it would appear, it really doesn’t mean anything. Stocks sometimes need to pause; it is as simple as that. Instead I encourage Sirius investors and traders to continue to expand the picture (or trading range) and really appreciate what the stock has done. It opened last week at $1.97; I think many continue to overlook this fact.
Instead, investors should evaluate the performance of the stock with a “one-week-at-a-time” approach; this is the only way to maintain both your sanity and capital. What we want to see is a positive net gain for the week and focus less on the day to day action. Only profit taking has kept the stock from maintaining $2.25, a level it has tested several times. Until I see evidence to indicate that I should change my opinion, $2.75 is still the goal and by my count, the stock is ahead of schedule. Sirius is still a buy at this level as there still remains 25% premium to the upside.
Disclosure: I am long SIRI, ORCL, AAPL.
