Both are tech stocks, but with very different products and in different industries.
So far, it’s been an up and down year for Israel’s domestic stock market. The Tel Aviv stock exchange’s bench mark TA 100 index rose 3.8% through late January, then dropped almost 11% to early April. It recovered ground to mid-June, before yet another pullback. That left it, on Thursday, up less than 1% for the year.
Under fire from rockets launched in Gaza, the country’s prospects for peace are still, to say the very least, cloudy. But Israel is accustomed to such conflict. Domestic attacks generally have minimal effect on Israel-based companies trading on U.S. markets.
In addition, the country has a reputation for punching far above its weight when it comes to competing on the global technology stage. And as China and many European Union companies turn from tariff-weighted U.S. goods to non-tariffed suppliers, vendors like Mellanox and SolarEdge have the potential to pick up market share.
Mellanox: A Second Quarter of Triple-Digit EPS Growth?
Mellanox headquarters are in the small, northern Israel town of Yokne’am Illit. The company produces high-performance chips that act as smart interconnect solutions for data-center servers and enterprise storage systems. The company is set to report its Q2 on Tuesday. Analyst consensus projects that it will report a 145% earnings gain.
That would add a second quarter to the company’s recovery from four quarters of flat or negative earnings performance.
The stock is up 28% so far this year. But it has not built a base since its November breakout from an eight-month cup pattern.
A filing from hedge fund manager Starboard Value on Thursday showed the fund had trimmed its stake in the stock to 8.6%, down from 10.5%. The news sent the stock below its 50-day moving average in heavy trade on Thursday. Mellanox pared its loss to less than 2%.
But the move made it harder for the stock — if shares rally on strong second-quarter results — to be bought as a rebound from the 10-week average. With shares now below the 50-day line, investors may have to wait for a new base to appear.
SolarEdge: Up 33% From A February Breakout
SolarEdge has not yet announced a date for its second-quarter results. Analyst consensus projects a 53% earnings gain and a 63% surge in sales. Both of those numbers would mark a slowdown vs. the company’s previous two quarters.
But the company, located in Herzliya, just north of Tel Aviv, has topped analyst expectations in the past four quarters. Earnings surprises have ranged from 9% to 45%.
SolarEdge develops inverter systems and other high-efficiency components designed to maximize power conversion in solar energy installations.
The stock is up 33% since clearing a double-bottom base in February. It has scooped out a 35% deep consolidation, which was not enough to undercut a prior base and reset its base count. The stock is meeting resistance at the 50-day line as it attempts to build the right side of its base.
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