Why I’m Selling Ceragon Even Though The Party's Not Over

Traders on Wall Street are counting the few days that still remain of the summer of 2007, which will officially end at the close of this week.

Those traders who chose to forego a sweltering vacation at the country's beach resorts still found themselves dripping with sweat at their offices as they stood watching the graphs above the stock exchange monitors, which over the last month moved at breakneck speed in both directions. From the time the declines began at the end of June to the low reached on August 16, the Dow Jones plummeted by more than 1,500 points, and from then through last Friday, it rebounded again by almost 1,000 points. By the time traders return next Tuesday from the long weekend break for Labor Day, it will be September, which is actually noted in the history books as the worst month in the entire year.

Heavy But With Potential

A small Israeli stock in my portfolio, Ceragon Networks Ltd.. (CRNT), stood out this week, since it recovered from the crisis at an amazing speed, hitting two-year highs during Friday's session. I wrote some time ago that Ceragon's stock has been "captured" by strong American hands, and last Friday those hands did not tremble as they acquired it at prices upward of $18, 44% higher than the low reached in the previous week when the crisis was in full swing.

Like many other Israelis in recent months, I too have finally given in and am exiting Ceragon with a fantastic 125% return in three months. In its place, I am adding Elron Electronic Industries Ltd. (ELRN), a much less rambunctious stock that I will comment on at length later. It is also a stock that could yield the same kind of returns as Ceragon, but it'll take it up to two years to do so since it is a holding company, and companies like these are not boisterous by nature.

As for Ceragon, I know that it has been picking up new contracts at a fantastic rate in the Asian markets in which it operates, and it could, perhaps, even be up for sale, considering the aggressiveness of the buyers. That said, sometimes you also have to be able to be courageous enough to quit a good investment, and I am getting out now before the analysts arrive on the scene and downgrade their ratings en-masse. They too, are probably stunned by Ceragon's run, and are sick of having to chase after it with ever-higher target prices.

CRNT 1-yr chart:

Published originally by Globes [online], Israel business news - www.globes.co.il © Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.