TeleNav (NASDAQ:TNAV)

CAPS Rating: 4 out of 5

Recs

3
Player Avatar TSIF (99.96) Submitted: 12/7/2011 5:33:04 PM : Outperform Start Price: $8.20 TNAV Score: -42.40

Quite honestly, I'm only playing this one for it's technicals, but it has the makings of being held onto for a possible long play if conditions align. The current pattern is rather interesting the last four months after it dropped literally over a cliff in early August. Since then TeleNav would make a good crosssaw with multiple cycles between $8 and $9.50. Only about 15% swing up and down, but a decent caps play with what appears to be a good safety net. Researching it for a RL technical trade, but I'd rather have volume a little higher. The largest drop seems to be a concern that expenses are mounting faster than revenue growth. This is fairly normal in this stage of the game and hopefully investors made management aware that they need to stay focused with a revenue/growth balance.

TeleNav specializes in personalized navigation and location based services. There are several company's, some new entering this field and barriers to entry seem small. On paper TeleNAV is rapidly growing it's customer base and should have reoccuring services revenue. It does appear to maybe be spreading itself thin with the mobile advertising, but all segments seem to be firing currently. They have agreements with Sprint and AT&T and are targeting Ford.

Overall very decent technicals at the $8.50 or so entry point and it might break out of the cycle upward. This will make it hard to determine an exit strategy, probably a trailing limit order. A break down is also possible after this much base building, but the steam and the risk appear to be minimal with the steep selloff from those protecting profits in early August. This should be a nice base.

No debt, strong margins, solid cash flow, growing hiccups.

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