Weekly thought on $IBIO, $INSG, $LRAD

Before you read on, please be aware that the analysis below is my opinion only and may include flawed assumptions and inaccuracy of logic; therefore, caveat emptor applies here.  Furthermore, all emphasis (color-coded, boldness, and underlined) on the excerpts are my own.

After nine weeks of upward momentum, the SP500 finally got a correction bar this week. SP-500_weeklyThe SP500 is now down over 36 points in the after-hour market. So the macro-picture now takes the center-stage over the fundamental story of the individual stocks. In other words, we have to weather the macro-storm first. Except for $INSG, I’ll be touching briefly on the other two stocks.

$IBIO We may hear some news in August if not next week. It is possible that the work of Thomas Isett’s SOW and the CFO’s “additional operational tasks” may bring news to the table this month.  With good news, I expect the price will go up regardless of what happened to the SP500 since $IBIO is already severely undervalued at the moment.

$INSG – This one corrected harder from the tariff threat more than my other two positions. At this point, Tuesday earnings call may help this stock regains the upward momentum. A quick review of Q1 earnings call transcript may provide insight into what we may hear in next Tuesday on the Q2 earnings call. Instead of cut/paste a significant portion of the Q1 earnings call transcript below, I’m going to condense them into an outline format below. You can always re-read the transcript by clicking here –> Q1 2019 Earnings call transcript.

  1. We have won new 4G customers who will launch mobile services with our 8000 series hotspot this year starting in the second quarter, and we are working on additional LTE opportunities.
    1. Our new gigabit LTE hotspot is now FCC-certified for the CBRS band, which opens the way to address more enterprise market applications
  2. The global 5G market momentum is accelerating. From our extensive customer engagements, we are seeing many operators accelerating lab and field trials in preparation for initial deployments.
  3. We’re working with the entire spectrum of customer deployment timelines in three categories
    1. Market disruptors
    2. The early adopters
    3. The market followers
  4. The pace of 5G market development, as described in Q1 is “spectacular.”
  5. The 5G industry is all about new applications and use cases that 5G enables
    1. Inseego’s 5G technology as an intelligent mobile edge device is a fundamental part of these applications.
      1. We have showcased
        1. telemedicine
        2. first responders
        3. robotics
        4. live 4K and 8K video streaming
        5. There are countless new applications in development
  6. We are pursuing the industrial IoT wireless connectivity market w/5G and gigabit LTE
    1. which is growing greater than 25% compounded annually across numerous segments:
      1. public safety
      2. manufacturing
      3. oil and gas
      4. transportation
    2. We secured new account wins with Skyus, which has been integrated into a Dell solution for the enterprise market
  7. We are expanding with SD-WAN providers such as Riverbed and extending our market reach
    1. by offering bundled solutions to our customers
      1. including international markets
        1. Recently secured a design win with one of the world’s largest financial services in Australia
    2. We strengthened our relationship this quarter with Hertz which has deployed our SD-WAN Skyus solution in select locations in North America
      1. is now being deployed throughout their location in Europe
  8. We are building a world-class enterprise distribution network of channel partners
    1. Our channel recruitment efforts have yielded numerous new value-added resellers partners this quarter, including
      1. Connected Solutions Group
      2. MicroAge
      3. Five Star Technology
      4. Connected Technology Solutions
      5. Arrow
  9. We are focused on two key growth opportunities in Ctrack business
    1. The emerging aviation market
      1. We begin to convert proof of concepts into deployments
      2. We’re finalizing the agreement with a European-based global carrier which mandates Ctrack as the tracking system for their motorized ground assets worldwide.
    2. Our traditional fleet business
      1. We have a large installed base and a purpose-built solution in the growing fleet market.
      2. Ctrack fleet business has experienced growth across all the key markets and geographies in which we have a presence.
      3. Ctrack Europe continues to perform well over 8% growth in all the countries we serve
  10. In summary, Inseego’s turnaround has entered the middle innings.
    1. We are launching new products
    2. winning new customers
    3. expanding into new regions
    4. Our outlook for 2019 and beyond is bullish with the second half of 2019 shaping up to be much stronger than the first half

My comment:

There is no doubt in my mind that earnings call transcripts for the past several quarters reflected the building of the foundation by Inseego’s management team. The company is ready to take advantage of the coming proliferation of new applications and use cases for 5G and gigabit LTE wireless network.

At this point, next Tuesday is the pivot point for $INSG. My opinion is that everything else, including the influence of the bearish SP500, is just noise. Yes, it will be quite a bumpy ride from here.

In a nutshell, unless the broad market has a significant meltdown, the business of 5G is a very compelling growth market that reminded me of the breakneck growth of $ENPH.

Take a look at $ENPH monthly chart below. INSG_ENPH_monthly$ENPH went through a period of volatility in 2018 (inside the red box) before the non-stop rally from January 2019 to the current month. Notice that $ENPH hit the low of $4.61 in January and rallied hard to the current price of $29.12. $INSG is now at the pivotal point of proving to the investment community that its products are also in breakneck demand in the second half of 2019. I will not be surprised that $INSG price action may follow $ENPH climb starting this month.

While $ENPH is in a completely different market, its main product, the semiconductor-based microinverters are in hot-demand that combined well with Sunpower solar panels. In my opinion, $INSG’s 5G router and Verizon combo have the potential to penetrate the 5G market similar to $ENPH and Sunpower ability to penetrate the solar energy market. I missed the $ENPH rally, but I think $INSG will be my second chance to make up for the $ENPH boat I missed.

LRADIn my opinion, the biggest clue to the upcoming earnings call on August 12th is the hiring of the VP of Software Sales. Below is an excerpt from the PR that, to me, provided some vital clue.

LRAD_VPSalesSaaS

My interpretation of the above is simple. The growth is there, but the company needed executive help to accelerate the growth of the SaaS business. By hiring the seasoned executive with software sales experience, LRAD has the potential to increase its revenues base by expanding on the software side, which can be quite profitable.

Due to corrections on $LRAD and $INSG, my port gave back some gain this week.

Current positions (in alphabet order):

Stocks = $IBIO  $INSG  $LRAD

Options = $TRXC (call);

Up >20% YTD

My 2 cents

From my camera:

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Categories: Daily trading Journal, trading journal

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