It really has been a struggle to find new opportunities that have real growth potential to them; it seems much of the lauded U.S. "industry creation" must be happening in the private side as finding solid public companies, that can sustain growth at 25%+ has been difficult for a long while. I've been interested in the tech space here for a few weeks, but most of the names blasting off are names coming out of cyclical troughs - as I've said most of the technology space is an over hyped "industrial" theme, but covered in silicon to make it sexy. Most of the real growth is centered in just a few larger names that everyone knows...

One idea I've been sitting on for a few weeks is Starnet Networks (STAR) - the chart has been doing well for many months - before the rest of the market came to life in fact. You can see throughout February 2009 as the market fell off a cliff, the stock held its range and never broke any key support areas. Those generally are leaders of the next move up. With the latest earnings report the stock has taken off the stratosphere. I am sure without looking this is the type of stock at the top of every Investor's Business Daily chart so I don't want to chase it - even though chasing extended stocks has been the order of the day to make large wins in the market lately. But I like the space it is in, and the longer term potential so I thought I'd take some time to do a longer piece even as we are in the middle of a flood of earnings.


I'm a big believer in the mobile, wired world - there are some very obvious large cap names that everyone knows and loves. The danger with smaller or mid cap names in the space (tech) is larger competition sees nice margins in a space and stomps in bye bye profits. I've had this happen to me many a time over the years. Perhaps Starnet Networks will face the same fate... but thus far it looks promising. Essentially the company provides "guts" for the 3G Network in which it is a dominant force, and hence will prosper (although with much more competition) in 4G.

Some articles from TheStreet.com give a good plain English overview - here and here

• Starent has enjoyed its dominance as a supplier of hardware and software to help telcos better manage resources and deliver media and advanced services to smartphones. Stated in English, they help make the Internet happen on smartphones.

Obviously we see how smartphones are taking share from "normal" phones even in the Great Recession

• The Tewksbury, Mass.-based company has two telco customers in the U.S., Sprint (S Quote) and Verizon, which make up 90% of the company's total revenue.

So much like a Ciena (CIEN) they provide technology to major telco companies and are heavily skewed in terms of revenue to only a handful of customers. Which is another major risk - you wake up one morning, see a lost contract (or new competitor) and your stock is down 40%. (been there, done that)

Which is exactly the issue here to some degree - while Starnet is dominant in 3G, these juicy profit margins are attracting competitors (of much larger scale) to the space for 4G.

• Alcatel-Lucent named Verizon Wireless as a customer for its packet core technology as the No. 1 telco plans its 4G network construction strategy, according to an announcement Wednesday at the CTIA wireless show in Las Vegas.