Acme Packet: A Small Company With Great Potential

Aug.23.07 | About: Acme Packet, (APKT)

On Tuesday, I submitted a new buy recommendation to subscribers of the website I write for, The company is called Acme Packet (NASDAQ:APKT).

The following chart shows where the stock stood as of Tuesday's close:

click to enlarge
ACME Chart

The problem is that on Wednesday, the stock ramped +9.25% on a huge volume spike. But I don't think my readers had time to get in. At this point, I would probably prefer to wait for a pullback as opposed to chasing the stock.

The company makes session border controls (SBCs), which is jibberish for cutting edge telecom equipment that helps make next-generation IP networks operate more seamlessly. It is still a small company, but it has great products, and a leading market share in this emerging space.

The stock has pulled back significantly from its highs at the end of 2006, and it has only been public since last October. I think the stock is on the mend, and has already seen its lows. The company reported a solid quarter recently, and management gave bullish guidance about its outlook.

Wednesday's big rise on surging volume validates my thesis, at least in the near-term, but I still think there is more room for upside.

Disclosure: The author is long APKT.