Riverbed Technology: One Hot Stock

October 26, 2010

Today I want to highlight another company demonstrating acceleration of revenue growth AND acceleration of earnings growth.  The reason I like these characteristics in a stock is that it tells me analysts have to keep ratcheting up their estimates, and thus their targets, and so institutional investors have to keep buying more.  And it’s institutional investors that drive stock prices.

The company is Riverbed Technology (RVBD), and its business is booming today as companies all over the world work to make their Wide Area Networks (WANs) work faster.

Like Netflix, Riverbed saw its stock gap up last week after an excellent earnings announcement.

Just look as these numbers.

While analysts were expecting revenue of $135.3 million, the company pulled in $147.8 million!

And while analysts were expecting earnings of 27 cents a share, the company earned 34 cents!

Guess how fast those analysts are revising their estimates now, and how fast price targets are being raised, and how fast buying plans are being revised.

And it’s not the first time!

Just three months ago, after the company released a crackerjack second quarter earnings report—and the stock gapped up—Mike Cintolo added the stock to the Model Portfolio of Cabot Market Letter, writing, “The company’s Steelhead hardware and software are the best at WAN optimization. In a nutshell, that simply means that Steelhead makes a company’s network—which could span across a campus or a continent—much faster. And that allows not only higher productivity among workers, but also helps customers avoid the cost and time of constructing entirely new networks. Looking ahead, the importance of corporate networks (and thus, the demand for faster speeds) is only going to increase, especially as companies put more and more of their resources in far away data centers. Riverbed’s second quarter report was outstanding, causing the stock to gap out of a consolidation. And, impressively, it hasn’t given up any ground, even during the minor market pullback of the past couple of days. Shares could always drop a point or two, but we think buying here will work out over time.”

When Mike wrote that, the stock was trading at 36.  Subscribers who followed his advice are looking at three-month profits of 56%, with the expectation of much more ahead.

To join them … and to be assured of getting the all-important profit taking sell signal on RVBD when the time comes, click here.

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