The second quarter reporting season is over, and CIBC Israel today summarized the quarter, and published its stock picks.
CIBC Israel analysts Avivit Mannet-Kalil, Sergei Vastchenok, and Amir Argaman said the US capital market was very volatile in the second quarter, and that the main factor behind the markets’ weakness was worries about further interest rate hikes in the US and other countries. They said the war in Lebanon, even though it was fought during the third quarter of the year, was another factor of uncertainty.
The analysts said the technology sector, to which most Nasdaq-listed Israeli companies belong, was one of the sectors worst hit by the stormy market. In addition to macroeconomic factors and worries about slower growth, technology stocks were affected by stock options scandals, which caused some companies to postpone the publication of their financial reports. These companies face the risk of delisting from Nasdaq.
CIBC Israel’s stock picks are Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE), and PowerDsine Ltd. (Nasdaq: PDSN). CIBC Israel believes that, after publishing strong financials, these companies will continue to grow. The investment bank also picked semiconductor companies DSP Group Inc. (Nasdaq: DSPG), Saifun Semiconductors Ltd. (Nasdaq:SFUN) and Zoran Corp. (Nasdaq: ZRAN), because they will likely benefit from probable higher demand for consumer electronics.
In the telecommunications equipment sector, CIBC Israel recommends AudioCodes Ltd. (Nasdaq: AUDC; TASE: AUDC), Ceragon Networks Ltd. (Nasdaq: CRNT; TASE:CRNT), ECI Telecom Ltd. (Nasdaq: ECIL) and Radvision Ltd. (Nasdaq: RVSN; TASE: RVSN). It believes that they will benefit from increased investment by large telecommunications providers and from rapid growth in emerging markets.
CIBC Israel also recommends Camtek Ltd. (Nasdaq: CAMT; TASE:CAMT), Fundtech Ltd. (Nasdaq: FNDT; TASE: FNDT) and Syneron Medical Ltd. (Nasdaq: ELOS) because of their low share prices, rapid growth, and strong competitive advantages. The analysts said these three companies had reached an interesting level for reasons not necessarily related to their business circumstances, such as foreign financial institutions selling holdings and low exposure.
CIBC Israel also recommends Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), because of its huge orders backlog, and Radware Ltd. (Nasdaq: RDWR; TASE: RDWR) for its value.
Mannet-Kalil, Vastchenok, and Argaman said that the fact that large companies were prepared to pay a premium over the market price for companies sent a clear signal to market players. The analysts believe that bargain prices for companies, combined with numerous mergers and acquisitions, had improved investors’ sentiment, and sent the market in an upward direction.
Published by Globes [online], Israel business news - www.globes.co.il - on September 5, 2006
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