Tide is going out on DragonWave

Mar 19th, 2010 – Comment

If you got in on the run from the late 2008 lows then think about taking some profits. They aren’t always available. If you are thinking of entering at this point you might want to see if it retests the $9.50 low of March 12.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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dragonwave

 

Hi Lou

Can you take a look at DragonWave? Has it corrected enough from its huge run last year and is it now a good investment.

Thanks,
Harry

 

Hi Harry,

DragonWave Inc. ( DWI TSX) is another telecom company coming out of the Ottawa area and as an added bonus it has Sir Terence Matthews as a director.  DWI’s unique selling feature is that their solutions provide an invest as you go bandwidth strategy. The packet microwave system developed by the company boasts the ability to address the  growing demand for mobile data rapidly and affordably.

In the third quarter of fiscal 2010 DWI saw revenue grow 235% to $55.8M. All well and now lets look at the stock and see what the price is telling us.

 dwi

The three year chart tells the tale of a huge advance in the stock and a pull back to support along the 200 day moving average. The uptrend that created this 14 bagger from the late 2008 lows has been broken and the question is can it claw its way back up.

I think it would be a lot to ask for any investment to produce back to back years of spectacular returns. There may be something left in the tank but its not likely to be as generous.

 

 

DWI3

The six month chart provides a closer view of the recent action and the double top that signalled the retreat from the uptrend. There was a bounce off the the 200 day moving average and there is resistance at $11.50. The MACD signalled the bounce  as it turned up and now is trying to cross above the signal but isn’t having a good run at it.

The fast stochastics did signal at pull back from the bounce on March 17.

 

If you got in on the run from the late 2008 lows then think about taking some profits. They aren’t always available. If you are thinking of entering at this point you might want to see if it retests the $9.50 low of March 12.

MAKE IT A HUGE SPRING AND HAPPY CAPITALISM!

Categories: Telecommunications
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