IPOs – LogMeIn-LOGM

by John Lansing | October 16, 2009 12:03 pm

 

It’s flu season, and the publicity surrounding the H1N1 (swine) flu has people more nervous than usual this time of year. And managers are worried about the impact this could have on employees and their businesses.

Sick workers can disrupt business operations and result in lost work days and, thus, lower productivity. This is especially troubling given the tough economic times and the already reduced workforce at most companies due to layoffs.

Enter LogMeIn Inc. (LOGM[1]). This company provides on-demand, remote-connectivity solutions to businesses and consumers — in fact, it connects more than 70 million devices worldwide.

Users rely on LogMeIn solutions for remote connectivity and support solutions. And the company also offers on-demand remote access software to your desktop from your iPhone. Pretty cool stuff! 

I’m not the only one interested in this recent IPO. LOGM is getting a nice round of applause from the folks following the venture capital world, and the stock recently received five upgrades:

“Overweight” by JPMorgan
“Overweight” by Barclays Capital
“Overweight” by Thomas Weisel
“Overweight” by Piper Jaffray
“Buy” by Canaccord Adams

LOGM’s IPO Story

LogMeIn Inc. went public on June 30, at $16 a share, and the stock immediately shot up to nearly $21. That’s a pretty nice move, but when it comes to trading IPOs, the approach I like best is trading the secondary reaction versus the initial “out-of-the-gate” reaction. By trading the secondary reaction, you prevent whipsaw from buying high out of the gate, and then selling low out of fear.

Also, it is typically the secondary move that is the meatiest part of the move, and you also have the benefit of using the charts to guide you through the overall supply and demand picture. Monitoring the supply and demand via the charts will assure that you don’t end up holding the bag when the party is over, because, as we all know, one day the punch bowl will run dry.

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Play LOGM’s Secondary Reaction

After going to $21, LOGM made a basing pattern over the next two months above the $15 level, creating two very reliable bullish patterns.

LOGM has formed a cup shaped pattern and looks to form a handle over the next week or so. (Learn more about the cup-and-handle pattern[2].)

See full-size image.[3]

And LOGM is now forming a secondary reaction ascending triangle[4] with no overhead supply on the stock above the $21 level.

See full-size image.[5]

As you can see from the charts above, LOGM has seen numerous significant technical events that will trigger even more strong buying pressure[6].

Why You Need to Get in NOW

But what’s the trigger that’s going to send this little stock flying high?

Earnings.

LOGM really started seeing some growth toward the end of 2007, and is expected to turn its first yearly profit in 2009. Quarter-over-quarter revenue growth during the past four quarters has been impressive at 99%, 86%, 73% and 58%, while EPS growth has been phenomenal at 108%, 150%, 200% and 289%. What other company is currently doing that!

LOGM is expected to announce earnings on Oct. 28 after the close, and I think this is going to be a blowout quarter for the company, which should propel the stock above the $21 level.

Every big boy in town is getting in ahead of these earnings, and you should too! So position yourself for big profits by buying call options ahead of the LOGM’s earnings announcement.  

 

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Source URL: https://investorplace.com/2009/10/ipo-stock-pick-logmein-logm/

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