Rvbd - Riverbed

E

eagle488

This stock caught my attention on a screen a few days ago. I feel this company is a buy right now and it would be good to hold for a few years.

Ever go by that locked closet in your office that is filled with networking gear? This company makes modules that go into that closet. These modules deal with compression and dramatically speed up data throughput. From minutes to seconds.

After reading several articles on CNET and all over the web, I have concluded that eventually this company will either be real big or get bought out by a company like Cisco. In fact, the reason why they went public was probably so they can get bought out.

In two years they already have 1000 different customers. Their product is not a luxury, but a necessity for companies with multiple branch offices. The internet is still operating on the lines of yesteryear and there is currently an internet glut, not enough bandwidth. It will be decades before the entire worlds broadband is optimized. Until then, data compression will be a neccesity.

I can only conclude that the current price is at a substantial discount to what it will become in the future. Remember stocks like AKAM? I confidently believe that this will be the next AKAM. Last year AKAM traded at 16 dollars and today it trades at around 50 bucks.

So either it will rise like AKAM or get bought out at a premium to whatever its trading at currently.
 
I see RVBD shows only a five week trading history at bigcharts.com. It is not possible for me to develop a trading system if there is little data to analyze. I feel like I am putting a coin in a slot machine in a casino when I buy unproven new or newer stocks. It's just gambling. Am I wrong?
 
You are right and wrong. You are right in that you cant establish a trading system at the current time. However, you are wrong in that its a gamble. I say that buying and holding this stock for at least 2 years will produce sizable gains.

Business is becoming more global, there is a broadband glut.
If you have a "help desk", call them up and ask them what they think of Riverbeds Steelhead product line. Go into that little locked room with all the networking appliances. Thats where you will find the Steelhead.

Here is an excerpt from one of the attached links:

"Copying a 170MB test file over the WAN without WAN acceleration took 28 minutes and 33 seconds."

"Using the Blue Coat solution, a cold cache file transfer was completed in 21 minutes and 46 seconds, and a warm cache transfer took just 14 seconds. Running the same tests using the Riverbed solution, a cold cache file transfer took a relatively speedy 13 minutes and 51 seconds, and a warm cache transfer took 25.7 seconds."

"To test MAPI performance with the Riverbed and Blue Coat appliances, we ran a VBScript that launched Microsoft Exchange, sent a message with a 6MB attachment and timed the send transaction."

"Running without WAN acceleration, this process took 126.8 seconds."

"Riverbed's solution cut down the transaction time to 34.7 seconds with a cold cache and a mere 1.28 seconds with a warm cache. Blue Coat's solution provided a significant improvement compared with the nonaccelerated process, but its performance trailed Riverbed's by a fair amount: With a cold cache, Blue Coat finished the transaction in 86.63 seconds; with a warm cache, it took 30.17 seconds."

http://www.infoworld.com/article/04/04/09/15TCriverbed_1.html

http://www.eweek.com/article2/0,1895,1980592,00.asp

As you can see, the Riverbed product line speeds up file transfers over the internet through a patented compression system.

2 years ago, Riverbed had no customers. Fastforward to the present time and it has over 1000 customers. Many of the customers are large companies.

I say buy a 1000 or more shares right now and hold on. I think its a good investment.

Most companies like this get bought out by the likes of Cisco. In fact, it appears that Cisco is taking a thorough look at Riverbed. Try going to www.riverhead.com. Cisco bought out that address so customers who mistakenly type in www.riverhead (vs. www.riverbed.com) will go to the Cisco website. Hehe. These guys are scared of Riverbed and are going to extremes to get their business. I say a buyout in the future is not unimaginable.
 
Just a footnote, one more analyst joined today with a buy rating and target of $24. 3 analysts are already tracking the stock and surely more will join aboard.

As I said before, the next great thing in society is broadband. They cant simply recreate the infrastructure. Too expensive, too time consuming. They have to make due with compression and Riverbed's "Steelhead" (those things in the network closet) are the key. I say this trends higher and my price target for 1 year is $50.
 
I just wanted to add one more thing for those who are currently in Riverbed.

Its a great long term hold, however, I would be paranoid holding it before its first earnings call. If your a gambling man then I suggest you hold. However, if you want to play it safe then you should sell before the call. There should be a nice healthy run-up to earnings however.

This is not quick trade, but a 2 year buy&hold. I believe it will be the next AKAM.

I think its wisest to take a position after the call.
 
Its true, this was on the Cramer show and some of his picks I do dispute such as SIX Flags.

However, this is a company I have been following for some time now. Its product is solid. It started out only 2 years ago and already has 1000 customers. This is a product you can see. Go to your network room and take a look at the stacked metal boxes.

This involves compression technology.
 
I think eagle has a great pick.

Their revenue growth is enough of a sign that their product has potential for a huge marketplace. Broadband is a big focus now, as files get larger and larger. Think of all the daytraders. Think of large companies with huge file transfers. You would be surprised how many large caps have problems with bandwidth at their offices.

Seems like a good long term hold. Also could be a good straddle long right prior to earnings.

Definitely a LBO target.
 
I would like to add a warning here to all those that consider this trade.

The earnings call is coming up and you can see what happens to stocks that disappoint in the slightest. Sometimes the stock doesnt have to disappoint and it still goes down. Look at AMD today, down over 14% in afterhours.

Of course, it can go up after the call as well. The current price does seem a little high when comparing its fundamentals though.

My style is to play it safe. Make your decision after the upcoming earnings call. The 3 analysts that are out have given it favorable ratings. However, 2 of the analysts thought the price was a little too high.
 
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