Thursday, January 14, 2010

DragonWave (DRWI) Competitor Ceragon Networks (CRNT) Breaking Out

As I peruse charts, I can't help but notice the fantastic move in Ceragon Networks (CRNT) which only came back onto my radar lately due to our position in DragonWave.   Before that it had been off my radar for a good 5-6 years.

As I said in the original analysis of DRWI, I still like DragonWave far more on valuation metrics... it's priced at $13.75 for 65 cents worth of earnings (year ending Feb 2010), whereas Ceragon is at $12.60 for 17 cents of earnings (year ending December 2009).  Even going out another year, estimates are for 93 cents for DragonWave v 40 cents for Ceragon.  But the market seems to be more than happy to pile into Ceragon at this massive discrepency in valuation.

On chart alone, Ceragon Networks is a "buy, buy, buy".- another stock so strong of late it simply dances along its 10 day moving average.  These are some of the conundrums one faces each day - do you toss out valuation and simply chase charts?  In this market, the answer has been yes.

Long DragonWave in fund; no personal position

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