Morningstar Discovers Trimble Navigation

One of the best things you can hope for when you start buying lesser known technology stocks is that they attract more interest, which is exactly what is happening with Trimble Navigation (NSDQ: TRMB).

The shares have been powering higher since I first recommended the company about a month ago, gaining nearly 10% so far and gapping up by more than 1% this morning alone. It was something of a headscratcher for me at first since nothing has fundamentally changed with the outlook for the company, but average trading volume has been growing even as short interest has been falling. More people are clearly buying the stock.

Over the past two weeks though, both Morningstar and Raymond James & Associates have initiated coverage of Trimble, which is drawing more attention to the company. While I haven’t been able to get ahold of the Raymond James report as of yet, Morningstar’s coverage of the stock hits on many of the same points I made back in May. Trimble has become an industry leader in navigational systems and automation, particularly when it comes to agricultural equipment like tractors and combines. That market is also still relatively nascent, with only about a quarter of the addressable market actually using such technologies.

Agricultural technology has become a hot theme as investors have realized that it will take better technology to allow fewer farmers to cost-effectively feed more people, and Trimble is at the forefront of Agtech.

Trimble Navigation remains a buy up to $30.

Shares of FireEye (NSDQ: FEYE) dipped last week on the news that Symantec (NSDQ: SYMC) was acquiring Blue Coat, a cybersecurity firm that some worried could give Symantec a leg up on our portfolio holding. The deal was announced after talks for Symantec to acquire FireEye broke down a few months ago, after Symantec become concerned about FireEye’s growth prospects.

As is often the case with FireEye, the tide has turned again. While Symantec probably did have some concerns about its potential suitor’s long-term prospects, it has since emerged that that it was actually FireEye which broke off talks when Symantec wouldn’t pony up what it considered a fair price. It has also come out that FireEye turned down at least one other takeover bid in the past few months because of a lowball price.

While the company’s shares have been battered, falling from a high of more than $80 in the months following its initial public offering to about $17 today, it is a leader in the cybersecurity field. It also has extensive contracts with both the U.S. and a number of foreign governments, not to mention its many corporate clients. Those relationships alone give the company a lot of value.

So while FireEye reportedly isn’t actively marketing itself anymore, management has hinted that if it gets an offer at or about $30 a share, a deal could happen. Considering all the mergers and acquisitions activity going on the tech space right now, with most of the major players incredibly cash heavy, I wouldn’t be surprised to see a buyout announcement in the coming months.

With merger activity picking up in the cybersecurity space, I wouldn’t be surprised it FireEye got a reasonable buyout offer and it remains a buy up to $22.

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