The Next Big Buying Opportunity?
George Leong: Israel has grown to become a key producer of technology and medical devices companies outside of the United States and Canada. We are talking about a very small country of less than eight million people, but which has become known as the “Silicon Valley of the Middle East.”
In fact, after China and Canada, Israel-based companies are the third-most-listed on U.S. stock exchanges as far as international listings, and they may be offering a buying opportunity.
Contrary to companies emerging out of China, Israeli companies have, so far, been quite clean as far as reporting reliability and confidence in the financial results, something that has escaped Chinese stocks that make them untrustworthy to investors. (Read “Chinese Stocks Promise Higher Potential Gains?”)
While there are major big-cap companies out of Israel, such as biotech Teva Pharmaceutical Industries Limited (NYSE:TEVA), there is also an excellent speculative buying opportunity in some of the small-cap stocks emerging from the country.
I have listed three speculative Israeli stock plays that are worth a closer look as a buying opportunity.
In the small-cap technology space, another buying opportunity is Israel-based Magic Software Enterprises Ltd. (NASDAQ:MGIC), which has been providing information technology services for more than 30 years. The company has built ventures with key software partners, including International Business Machines Corporation (NYSE:IBM), Microsoft Corporation (NASDAQ:MSFT), and Oracle Corporation (NYSE:ORCL).
In 2013, the company was ranked 37th on the Deloitte Israel Technology Fast 50 list.
Magic Software is profitable, with higher sequential earnings in six straight years, from 2006 to 2012, prior to a small decline in 2013. The valuation is reasonable at 14.66 times (X) its 2015 earnings.
Another buying opportunity may be small-cap Israeli tech play AudioCodes Ltd. (NASDAQ:AUDC), a developer of advanced voice-over-IP (VoIP) along with converged VoIP and data networking products and applications. The company sells to two major markets: broadband, mobile, and enterprise networks and cable.