Home October 2012 Dialing for Less Dollars

Dialing for Less Dollars

I currently follow 76 publicly traded companies that trade here in the U.S. markets.  I have written in my column recently about Allot Communications (ALLT), Mellanox Technologies (MLNX) and Perrigo Co. (PRGO).  All have been top performing stocks this year in my proprietary stock grading and ranking system.
This month, I want to write about another stock that is currently ranked in the top 200 out of the 2,983 stocks that I follow in my Best Stocks Now app.  The name of the company is Magicjack Vocal.  This is an aggressive-growth stock with a market capitalization of just $507 million (small-cap).  The company is headquartered in Netanya, Israel.
Magicjack is a device that plugs into a USB port and the user’s computer.  This allows users to make unlimited phone calls to the U.S. and Canada.
The firm’s first product was launched in 2007.  In September 2011, the company introduced Magicjack Plus, which no longer requires a computer.  The company’s website attributes the invention of Magicjack to Dan Borislow, who has numerous patent claims pending on voice-over-internet (VOIP).  The stock trades on the Nasdaq under the symbol (CALL).
The stock has delivered an average total return of 31 percent over the last five years, while the market has delivered -0.2 percent.
Over the last three years, the stock has delivered and average total return of 87.5 percent per year, while the market has delivered just 11.9 percent.  Over the last twelve months, the stock is up a whopping 164 percent, while the market is up 20 percent.
Performance of a stock is one thing; valuation is another. I currently like the valuation of the stock.  The shares are currently trading at just 14X forward earnings, and the company is expected to grow those earnings at a rate of 17.5 percent per year, over the next five years.  This makes for a favorable PEG ratio of just 0.80.
When I combine the performance of Magicjack with the valuation of the shares, and then compare against the other 2,982 stocks that I follow, the stock earns an overall Gunderson Grade of A- and ranks #147 overall.
I like stocks that are grade A- or above and are ranked in my top 200.  Although neither my clients nor I currently owns shares in the stock, this is one that I would consider in a well-diversified aggressive growth portfolio.

All data from Best Stocks Now app.

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