August 13, 2010 | In: Uncategorized

MLNX: A Stock That May Very Well Rebound

I did buy Mellanox 3 weeks ago at around $16. I sold the stock almost immediately at a very small loss, as I figured that I entered at the wrong moment (this was a wrong decision though as the stock rebounded to $17). Ever since, I started following the stock as I think it’s very interesting. The company fundamentals are great, the company has never lost money (from what I’ve read), and they keep getting more and more contracts (they have just secured one with NASA). There is no reason why this stock is going down other than scared investors overselling.

I think MLNX will settle at around 15.50 for the short term, and then it’ll start going up, the stock is a must buy below 15, and it seems to have a good support level at around 14.70. Although the technical analysis of MLNX looks very bearish, I do believe that the stock is very undervalued, unless someone can explain to me why the stock is going down that much.

MLNX already went through a major correction last month, after they lowered their guidance for the next quarter, while beating estimates (they DID beat the estimates). I can’t see any reason why the stock should be going down.

If the stock keeps going down due to selling on low volume, I think the company should make a strategic decision to start buying its own stock, at least temporarily to attract investor’s attention. Even a low volume buy (like 10,000 shares) will send a very positive signal to bullish investors. Take BIOS, for example, where the company executives starting buying stocks (around 30,000 shares @ $4), and the stock just skyrocketed in 2 days. This strategy reassures investors that the company is confident about its future.

2 Responses to MLNX: A Stock That May Very Well Rebound

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Revisiting Mellanox « Fadi El-Eter

August 24th, 2010 at 3:35 pm

[...] have already written about Mellanox and why I think it’s very interesting, especially in these days where acquisitions of small [...]

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Revisiting MLNX: Again and Again and Again « Fadi El-Eter

September 28th, 2010 at 11:16 am

[...] have recommended MLNX a couple of times before, and I have predicted a rebound. MLNX is still a very interesting stock, but is currently way overpriced. The stock is currently [...]

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