The price action on Akamai lately has really set it apart as a market leader. At the same time, Intel's record earnings tells the story of a very healthy demand in the tech sector. This is a company that has been around for a long time, but people are just now turning onto it.
This coverage will complement a strategy of buying out-of-the-money August calls which will play out over the next few weeks.
This company is now serving 90 of the top 100 e-commerce sites on the planet. Simply put, they are the best at what they do. They allow websites to load fast from anywhere and offer their clients a measure of protection from cyber-attacks.
They are also moving into serving up sites for mobile users, tailored to their device, with no additional development time required. This article is a must-read.
http://gigaom.com/2010/06/24/structure-2010-akamai-doing-terabit-events-thanks-world-cup/
To the point about cyber-security, a growing source of revenue for them:
"If you want to be protected from cyberattacks, let us do it for you at the edge of the Internet. If the fight reaches your own router, you've already lost," says Chief Executive Paul Sagan.
from http://www.forbes.com/forbes/2010/0719/technology-security-hacking-firewall-foiling-hackers.html
The expectations for their upcoming earnings are pretty high. It might even be the kind of thing where it will be wise to sell on earnings day before the release. I don't know if the buzz and expectations will be lived up to in terms of the headline numbers. But that will have more to do with the market mentality at that time.
I do feel strongly that over the next couple of years this company's position as a power player in the industry is only going to solidify. No one is doing what they're doing, and they're doing it very, very well.
The process of valuing a company, the ongoing day-to-day market moves, tend to exaggerate things. So while I was someone talking up Netflix in 2008 and 2009 (and even earlier this year with the price at 60 bucks), the valuation might now be a little lofty.
What is likely to happen with Akamai is similar. Even though to people who are turned onto this stock, the feeling is that it has already been run up a lot, this is only the beginning. Is today the best entry? I don't know, probably not. But ride out the swings and I think we're headed to 50 and beyond.