GoPro Pops, Ambarella Powers Higher, and Microsoft Hits a New 52-Week High

Though the Dow edged lower, these three tech stocks moved higher for the week.

Jun 28, 2014 at 9:00AM

The Dow Jones Industrial Average (DJINDICES:^DJI) finished down 96 points for the week, or 0.56%. Among the more interesting tech stocks during the week were freshly listed GoPro (NASDAQ:GPRO), its chip-partner Ambarella (NASDAQ:AMBA), and software giant Microsoft (NASDAQ:MSFT).


The GoPro HERO3. Source: GoPro.

GoPro popped and then popped some more
GoPro, which makes highly popular wearable digital cameras, finished the week up a cool 49% from its $24 IPO price. This is a hot technology company, with buyers apparently just as interested in its stock as consumers are in its cameras.

The stock surged 30.5% on its first day of trading. As if that weren't enough, investors pushed the stock up to a high of $40.47 per share on its second day of trading -- yet another 29%-before the stock settled to close at $35.76, or 14.10%.

During 2013, GoPro generated $986 million in sales and $60.6 million in net profit, valuing the company at roughly 4.46 times sales and 72 times net income. This is extremely steep, but if the company can continue to post gangbusters growth over the next several years, its valuation may be justified. It pays to be careful, though, as based on where the stock is trading, a lot of optimism seems to be baked in.

Derivative play Ambarella pushes higher, too
Ambarella, which underwhelmed at its own IPO just a few years ago, has been doing extremely well following multiple quarters of strong revenue and profit growth. That its chips are designed into GoPro wearable cameras is no small part of the company's success.


The company's shares moved up 4.6% for the week and are now up approximately 42% since its $21.91 low hit in early May. This move was no doubt fueled by optimism surrounding the GoPro IPO. The general line of thinking seems to be that with a nice cash infusion, GoPro will be able to expand significantly, bringing Ambarella along for the ride. 

Though Ambarella is also looks pretty pricey, trading at 26.58 times this year's consensus earnings, the sell-side is looking for some pretty serious growth in the following year, with revenue growth expected to accelerate to 21.50% and earnings-per-share growth to come in above that at 25.6%. If Ambarella can post these kinds of growth numbers and successfully fend off any potential new competitors to this space, it could continue to move higher over the long term.

Microsoft hits a new 52-week high
Microsoft, the software giant that many had written off as dead money, has been on a very nice run lately. The shares hit a new 52-week high of $42.29 during Friday's session before closing at $42.25. Keep in mind that though the Dow was down 0.56%, Microsoft closed the week up a cool 1.36%.


Microsoft's Nokia X2 handset -- in green! Source: Microsoft/Nokia.

During the week, Microsoft launched yet another Android phone called the Nokia X2. This is a low-end device aimed at the $135 price point, sporting 1GB of memory, 4GB of storage, and a 4.3-inch display, and it features a low-end 1.2 GHz Snapdragon 200 processor. Note that it doesn't run Google's version of Android, similar to Amazon's Kindle Fire and Fire Phone, and instead requires use of Microsoft services.

While Microsoft certainly has the financial wherewithal to keep pushing into the smartphone market -- and in particular the low end of the market -- it'll be tough to compete with the app ecosystem that Android offers, as well as the already formidable installed base. Emerging markets seem to be the company's best shot, though Google's Android One initiative, which helps OEMs build $100 Android smartphones, could prove a significant headwind to meaningful Windows Phone adoption.

Leaked: Apple's next smart device (warning -- it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of these devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and to see Apple's newest smart gizmo, just click here!

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Ambarella and Apple and owns shares of Ambarella, Apple, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information