Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

The Stocks Making a Comeback in the Last Two Earnings Seasons

Wednesday, February 20th, 2013
By for Profit Confidential

Stocks Making a Comeback in the Last Two Earnings SeasonsWhat has been very encouraging over the last two earnings seasons is the strength we’re getting in small-cap technology companies (stock market action aside). A lot of smaller technology companies are reporting a significant improvement in revenues, and that means that consumers are opening up their wallets, if only just a little.

I’m not a fan of large-cap, retail technology stocks as stock market investments. Sure, Apple Inc. (NASDAQ/AAPL) is a great company, and I like their computers, but the company just priced itself out of its own market. Apple is now struggling to grow. Dell Inc. (NASDAQ/DELL) did the same thing. It priced itself out of its own market (the other way around); and while it once was a great investment on the stock market, it’s been terrible for the last dozen years.

What we’re getting now are countless smaller names in enterprise technology saying that their revenues are growing, which is more important than earnings growth. This is exactly what the economy needs. Big-cap companies will continue to have to deal with weakness from global operations; but domestic small-cap tech stocks are like a breath of fresh air, and the stock market is beginning to notice.

Take a look at Qlik Technologies Inc. (NASDAQ/QLIK). This is the second growing company I recently found out of Radnor, PA. (See “Great Old Economy Business That Isn’t Full of Hot Air.”) Qlik makes business intelligence software, which is used by corporate and government customers to share data. This is a growing company, but the position slowed on the stock market last spring, after a very strong start in 2010. Qlik’s stock market chart is below:

QLIK Qlik Technologies Inc. Nasdaq Stock market chart

Stock chart courtesy of www.StockCharts.com

  • Profitable Options Trading Made Simple...

    "I'm offering you the easy, shortened version of a $17,000 Harvard-type options trading program that could generate you tens of thousands of dollars a month for as long as you want." ~ George Leong, B.Comm.

    Full story here.

I think this small, but growing enterprise tech company has a lot of potential going forward. Its fourth-quarter revenues grew 27% to $137.5 million. In today’s economy, that’s solid. Earnings fell a little bit to $13.3 million, down from earnings of $15.6 million in the comparable fourth quarter, but that doesn’t bother me. In this stock market, we need to see top-line growth, and all of Qlik’s metrics, including license, maintenance, and services revenues, produced.

The company beat the Street with its 2012 fourth-quarter revenues and earnings. It guided first-quarter earnings slightly below consensus, but upped its total 2013 revenues outlook above current expectations.

I haven’t conducted a scientific study on the data yet, but my read is that business conditions are improving quite well for smaller, domestic technology companies.

The stock market is still in a bit of a daze right now after such a strong January. The collective uncertainty is very apparent in the trading action, and earnings are still coming in. Where the stock market goes is up to the Dow Jones Transportation Index, but I suspect we’ll get a little more upside followed by a retreat.

So, to sum up: revenues in small-cap, enterprise tech companies are improving. Earnings, or a lack thereof, aren’t as important in this kind of market. The strength started in the third quarter of 2012 should have staying power. It’s a good sign for the U.S. economy and employment in the field of information technology (IT). I like what Qlik is accomplishing.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.