SWIR- Sierra Wireless- NASDAQ

Recent Earnings results: 2nd quarter

Sierra Wireless (SWIR): The modem supplier posted Q2 revenue of $159.1 million and a non-GAAP profit of 14 cents a share; the Street had expected $156.6 million and 8 cents. For Q3, the company sees revenue of $168 million to $173 million and profits of 15-17 cents a share; the Street has been forecasting $156.1 million and 10 cents. Ergo, in late trading, SWIR is up 35 cents, or 4.6%, to $7.93, after gaining 37 cents in the regular session.

Metrics: 115 million in cash, or $3.80 per share! 0 Debt; Profitable; 30 million shares outstanding;

Estimates of 86 cents a share for 2011 profits.

This is partly a technical analysis trade, as well as a fundamental analysis trade combined. The cash per share is close to 1/2 the price per share for the entire company ($3.80 per share in cash, 115 million), the recent earnings and outlook were stronger than expected, and it’s rebounding nicely off 52 week lows on July 1st (when the market bottomed at 1011). This is also a play on G4 wireless growth as well.

Resistance at 9.50, Gap near $12 way above. Gap below at 8.25. The stock had a surge from 7 to 9.50 following earnings, ran into resistance selling, pulled back smartly, and is now trying to break out of a wedge pattern.

Buy Advice- Looking for a hopeful market induced pullback to fill that 8.25 gap, just 40 cents below, and then a surge to $9.50 resistance, potentially up to $12 later on. Upside from 8.60 is 10% to 9.50 as a likely minimum return with potential for 35-40% plus. Buy a 1/2 trade position ($12,500 suggested max) hopefully between 8.20-8.70 ranges and be patient. If it blasts upwards and you miss it, I wouldnt chase it. Try to buy in that 50 cent range, again not knowing for sure if 8.25 will fill or not on the downside, but pullbacks from the 8.70 area are a good spot to build the trade position. Much above 8.70 and this should move to 9.30 quickly.

David Banister
www.ActiveTradingPartners.com

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