This is the 8th in a series of ideas where I contrast a cheap security with an expensive one that otherwise shares some characteristics. So far, I am 5 for 7:

For reference:

• 3/14: Buy Met-Pro (MPR), Sell Nalco Holding (NLC)
• 4/18: Buy Johnson & Johnson (JNJ), Sell Allergan (AGN)
• 5/3: Buy Columbia Sportswear (COLM), Sell UnderArmour (UA)
• 5/10: Buy C.R. Bard (BCR), Sell Intuitive Surgical (ISRG)
• 6/6: Buy EZCORP (EZPW), Sell Aaron's Rents (RNT)
• 6/20: Buy Shoe Carnival (SCVL), Sell Collective Brands (PSS)
• 7/9:  Buy Hormel (HRL), Sell DineEquity (DIN)

While I am not particularly excited about either the meager 2% average return or the mistake on ISRG, I will point out that each one of these paired trades was designed to be conservative.  I aimed for the better balance sheet, the lower growth, the more diversification and/or the lower valuation in all cases. 

Today's trade shouldn't draw some of the criticisms that past recommendations have elicited.  While Akamai ( ) and NetApp ( ) certainly aren't competitors, they are both leveraged to the exploding data growth theme.  Further, they are both Mid-Caps.

NetApp reports this week (8/19), while AKAM just reported.  Both these stocks are on my watchlist, and I am long AKAM in a portfolio I manage as well as in my Top 20 Model Portfolio. 

AKAM disappointed with its disclosure of a more aggressive pricing environment for its content delivery services.  I would note that the company has long been reducing operating expenses and passing along savings to its customers (lower GM).  I had never invested in AKAM until very recently and find it to have a valuation that should attract value investors.   NTAP has been struggling too in a more competitive environment for its storage solutions.  Here's the tape:

While NTAP's margins are depressed, it seems that the market is betting AKAM's margins will come down a lot while NTAP's will rise.  NTAP has a lot of cash, but it also has a ton of deferred revenue on the other side.  This shows up in the three highlighted ratios regarding total liabilites.  AKAM is a much safer play in a weak economy, while both companies should prosper in an improving economy.  NTAP is a little overbought these days, but that's not so unusual in this market.  Both of these companies could be acquisition candidates.  My bottom-line is that AKAM is very cheap relative to NTAP.

Disclosure:  Long AKAM