Internet Gold Golden Lines Ltd. (NASDAQ:IGLD) is largely off Wall Street's radar (just one analyst covers it), technically bullish and poised for a break out.
Internet Gold Golden Lines is a communications company that provides Internet access and related value-added services, international telephony, e-advertising, content and e-commerce services throughout Israel under the brand name smile. The Company launched its International Telephone Service [ITS] under the brand 015 in August 2004. The license to provide ITS was granted for 20 years.
It has two focused businesses: Communication and Media. Communications provide Internet services and international telephony services, such as Internet Access, Value Added Services, International Telephony, and IT Integration businesses focus on the provision of services and support to individual and business end-users. Media provides Website content provision, portal operating, search engines, lead-generation, e-Commerce and Paid Content. In January 2007, the Company's wholly owned subsidiary, Smile.Communications Ltd., completed the acquisition of 012 Golden Lines Ltd.
FUNDAMENTALS: Internet Gold is an Israeli company that appears to be on the verge of a major growth spurt. While a small company that has been turning a profit for several years now, not until the last three quarters has the company shown explosive growth. The growth at the end of 2006 was enough to help double their profits over the previous year. 2007 is expected to be even bigger with an earnings estimate calling for 130% growth. I like the fact that management owns 70% of the company, which indicates its members have a strong vested interest in seeing the company succeed. Net margins aren't impressive at 7%, but it is improving quickly. Return on Equity is excellent at around 16%.
TECHNICAL: IGLD is in the process of carving out the right side of a fairly short base, but one that is looking quite bullish. Based on the big, high volume drop in the weekly chart at the beginning of March, the base is probably too short to work through that technical damage. I'd be hesitant to initiate a position on a break out from this current base and would rather catch it on a pull back from any break out. The company reports earnings on May 8th, which could very well be the catalyst this stock needs to soar to new heights. Put it on the radar.
Disclosure: Author currently has no position in Internet Gold (IGLD).