apkt crus meli Ebix RVBD cf

They are growing by leaps and bounds. They are in the right business at the right time. They are Fortune magazine’s 8 top high-technology companies. They did have a big run up in their stock prices. But, as the old Wall Street proverb goes, past performance isn’t a guarantee of future performance. What should investors do with these companies?

Let’s take a look at each of them:

Baidu (BIDU)—China’s largest search engine portal—the Google (GOOG) of China. It trades at reasonable PE and hefty profit margins, compared to E-Commerce China Dangdang Inc (DANG) and Youku (YOKU). The problem, however, is that Baidu operates in a semi-Communist market environemt in which the government changes the rules of the game frequently, especially for the politically sensitive sector of social media. That’s why I will avoid the stock at these price levels.

2. Cirrus Logic (CRUS)—A semiconductor company that rides the smartphone and tablet trend, which is still in its early stages. The stock is certainly a buy.

3. Priceline.com (PCLN). After some early difficulties, the company has become the booking site of preference for international travelers. But given its rapid stock price increase and the closing in of competition from Expedia (EXPE), you should avoid the stock at these price levels.

4. Mercade Libre (MELI)—The beneficiary of e-commerce in Latin America. With a strong partnership with eBay, a growing Latin American economy, and a reasonable (for the sector) P/E, MELI is a buy.

5. Ebix (EBIX)—A beneficiary of the outsourcing trend, the company thrives by helping insurance companies cut transaction costs. Outsourcing, however, has come under criticism on several fronts that may hurt Ebix’s business. I would sell the stock.

6. Apple (AAPL)—The undisputed leader in modern wireless mobile devices, Apple needs no introduction. The question, however, is whether things get better for Apple after the departure of its founder and legendary leader Steve Jobs. Hard to say—that’s why I will stay with my previous recommendation: Avoid the stock until I get better visibility on leadership transition.

7. Acme Packet (APKT)—A leading manufacturer of session border controllers and other devices that deliver voice and video over the Internet, the company rides the multimedia trend, as companies rush to replace old legacy technologies with IP solutions. The problem, however, is that after a big run up in the stock, insiders are cashing out. That’s why I'd avoid the stock.

8. Riverbed Technologies (RVBD)—A leading wide-area network (WAN) provider, the company has benefited from soaring demand for faster Internet. This area, however, is highly competitive. Today’s winners can be tomorrow’s losers, as the case of Cisco Systems (CSCO) and Alcatel-Lucent (ALU) has confirmed. I would avoid the stock.

Company ------ Recent Price -- PE ------------ Recommendation

BIDU	$147	67	Avoid
CRUS	$15.73	5.87	Buy
PCLN	$525	37	Avoid
MELI	$68	47	Buy
EBIX	$17	10.16	Sell
AAPL	$400	15.84	Avoid
APKT	$51	68.82	Avoid
RVBD	$24	76	Avoid