As the markets traded to new all-time highs there were several stocks seeing massive post-earnings pops on Tuesday. In this piece I am looking at these stocks to determine if the move was warranted and if further upside exists.
This Stock Just Keeps Going Higher!
One of the more under-the-radar performances of 2013 has been from Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) and its 173% return, including its 9.17% post-earning pop on Tuesday. For the quarter, Himax posted revenue growth of 5.4% year-over-year (slightly beating the consensus) and an EPS of $0.08 (beating by $0.01). By most accounts, it was a very small beat, but it was guidance that drove performance.
For the upcoming quarter, Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) expects a 17%-20% quarter-over-quarter (Q/Q) increase in revenue, which exceeds the expected 15% improvement. The company also saw strong margin improvement both Q/Q and yoy as small/medium sized panels for the IC design house (with LCD manufacturing capability) increased 26%. Hence all numbers look good for the company, but in my opinion, it is now fairly priced.
The company’s smartphone-related business has grown and is now 52% of revenue, yet it still faces a 16% fall in larger panels. Sure, I like what I see in smartphones, but the company is still highly reliant on the declining LCD business. As a result, I am going to “sell” with the stock trading at a fair value 2.75 times sales and 40 times operating cash flow.
The Quintessential Example of Value
Prior to Tuesday, I had never heard of the $850 million company Interactive Intelligence Group Inc (NASDAQ:ININ), and therefore spent many hours reading transcripts and exploring its website following its quarterly report. Interactive Intelligence Group Inc (NASDAQ:ININ) is a diversified software applications company, one with explosive growth!
For the quarter Interactive Intelligence Group Inc (NASDAQ:ININ) crushed expectations with revenue growth of 39% and an EPS of $0.17 (beating by $0.15). The company saw strong growth throughout all regions including a 31% rise in total orders, 42% rise in cloud-based orders, and a 42% rise in cloud-based revenue. Despite this massive growth, the technology company is still trading with a price/sales of just 3.75 and has operating margins of 0.57% (meaning much room for improvement). In my opinion, this is a cheap buy-and-hold stock that I expect to trade significantly higher post-earnings.
Mercadolibre Inc (NASDAQ:MELI) is an internet-based company that acts as a hosting service for other companies. Since 2011 the stock has been volatile, but on Tuesday it rallied 17.88% after posting earnings that missed on the bottom line and slightly beat on the top line. For the quarter, total sales grew 23% while net profit declined 11% (showing margin declines).