Sunday, December 2, 2012

Tangoe - TNGO

They say not to get emotional about any stock to be successful in trading. I have learnt the lesson the hard way. However I'm still sticking to this one because i think it eventually moves higher in a big way. First target would be $15 and then eventually $17-$18.

Its a fundamentally sound company and in the right (growing) Mobile Device and Mobile Expense management for big Fortune 500 corporation. 95% of their revenues are recurring. They trade at about 3-4x the sales. Some of the other recent Software IPOs trade at about 6-10x sales (ELOQ, SPLK). They annouced a small buyback (only $20M but indicates the company is projecting decent operation cash flows so not to dip into their working capital in a big way)

TNGO got hurt in the recent quarter because of higher expenses (read growing direct sales team). They currently have IBM as their strategic partner ..I'm assuming they want reduce their dependency on them to improve margins. Thats very reasonable for a growing company esp if they believe product. That said, I'm little bummed that they haven't caught the bid in this recent market run. I'm sticking with my stop loss at 12.50 on this now. 

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