Sunday, October 31, 2010

DSP Group, Inc. (NASDAQ: DSPG) Q4 2010 Analysis

Recent price: 7.33$
P/E Ratio: -
3 month Target Price: 8.21$

Company Description
DSP Group, Inc is a leading global provider of wireless chipset solutions for converged communications at home. Delivering system solutions that combine semiconductors and software with reference designs, DSP Group enables consumer electronics manufacturers and service providers to cost-effectively develop innovative revenue-generating applications with fast time to market. DSP Group provides a broad portfolio of wireless chipsets integrating DECT, Wi-Fi, PSTN and VoIP technologies with state-of-the-art application processors. With a growing share of the wireless home telephony market, the Company provides comprehensive solutions supporting all major digital cordless technologies worldwide.

DSP Group serves a broad customer base including leading CE brands, original equipment manufacturers, original design manufacturers, telecommunications operators and service providers. Enabling converged voice, audio, video and data connectivity across diverse consumer products – from cordless and VoIP phones to home gateways and connected multimedia screens – DSP Group proactively partners with CE manufacturers to shape the future of converged communications at home.

Confidence Margins
Strong resistance $8.21 (+12%)
Light resistance $7.50 (+2%)
Light support $6.65 (-9%)
Strong support $6.00 (-18%)

DSPG is currently in an uptrend and still has a lot of potential for growth over the next quarter.

Entry Strategy
For the cautious investor:
Buy the stock for 7.33$ or less.

For the risk-taking trader:
Buy the stock for 7.33$ or less; you might use some leverage to increase the payout from this trade while paying little interest considering the short holding period. If the stock goes under the light support level, you might want to consider closing the position if you cannot bear to have your position temporarily getting to your strong support.

Exit Strategy
For the cautious investor:
Sell when the stock reaches about 8$ or keep it until about 8.20$ if you are very bullish.

For the risk-taking trader:
Same strategy as the cautious investor, except that you should consider closing the position before the light support is the use of leverage has negative effects on the position.

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