Perry's Graphic Picks

12/10/2004 12:00 am EST

Focus:

Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

"Graphics for computers and for wireless broadband networks, are areas that I feel may offer some of the biggest profits the market can deliver over the next three months," says trading expert Bryan Perry. "With that in mind, we are adding two picks in these markets."

"ATI Technologies (ATYT NASDAQ) supplies graphics processing products and technology for desktop and notebook PCs, consumer electronic devices, digital televisions (including set-top boxes), and video game consoles. Its processors increase the speed and complexity of the images that can be displayed on PC monitors and improve image resolution and color definition. For the fiscal year ended August 30, sales rose 44% to $2 billion. For the same period, net income rose from $12.2 million to $188 million.

"From a technical standpoint, the stock is breaking out to new 52-week highs on a big rise in average daily volume. Prior to November, the stock spent the past nine months in a four-point channel between $14 and $18. Now, having broken out, the shares are challenging the stock's all-time high of $23.50 set back in March 2000. Once the stock clears $23.50, the next move is $27, our intermediate-term price target, for a projected gain of 37%. And again, with ATI being a chip stock, we might be low. For those aware of the risks of options trading, we suggest the ATI May 15 Calls , currently offered at $5.50 per contract. Our price target for the calls is $12.

"Ceragon Networks (CRNT NASDAQ) is a pacesetter in broadband wireless networking systems and enables rapid and cost-effective high-capacity network connectivity. Its product family offers innovative built-in add/drop multiplexing and encryption functionality to meet the growing demand for value-added broadband services. The third quarter, which ended Sept. 30, was the company's 12th consecutive quarter of revenue growth and third consecutive quarter of profitability. Revenues for the quarter were $14.5 million, a record for Ceragon and an increase of 59% as compared to the third quarter of2003. Gross profit for the third quarter of 2004 increased to $6.0 million, or 41.2 % of revenues.

"Technically speaking, the stock has emerged from a multi-month downtrend with its 20-day and 50-day moving averages just about to cross up through the 200-day moving average, a technical situation that we call a ‘golden cross’ signaling higher prices ahead. The one-year chart shows a beautiful reverse head-and-shoulders pattern with a recent spike in volume as it cleared resistance at $5.50 on Nov. 29. Since then the shares are just consolidating sideways, setting the stage for a move back up to its February highs. Our price target for the shares is $8 for a projected gain of 35%. For options traders, we note that there are no options on CRNT."

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