Our first idea is a tech stock whose earnings estimates have been increased by 31 analysts in the past 30 days. Our second recommendation is a sale of a company whose shares have recently been pummeled.
Buy: Red Hat (RHT)
From The Periscope Report
Red Hat (RHT) is one of our Top Ten mid-caps (Mcap: $18.9B) because it is the anti-Microsoft. We first recommended RHT way back in 1999 when the company was a micro-cap and the stock was at $2. The stock is up 5,150% since then!
RHT provides open source software solutions to develop and offer operating system, virtualization, management, middleware, cloud, mobile, and storage technologies. The main product is Red Hat Enterprise Linux, an operating system platform that runs on hardware for use in hybrid cloud environments.
Management had provided guidance for this quarter, with revenue expected to be in the range of $695 - $702 million, yielding net earnings of $0.67 per share. Not surprisingly, the sell-side had the same forecast. We said an aggressive stock buyback program would allow RHT to beat estimates by a penny or two. We were a little off as RHT clobbered estimates by ten cents. Management also raised their guidance for fiscal 2017. The stock gained 7% after the report.
Tom Byrne, The Periscope Report, t2byrne@gmail.com, 4025 Sunset Ridge Drive, Canyon Ferry Crossing, Helena, MT 59602-9799, 406-465-4663, October 3, 2017