Akamai Technologies (AKAM) is based in Cambridge, Massachusetts and was founded in 1998. The company is a cloud-based software firm that provides application software that allows users to deliver, optimize, and secure online content. The company has been on my radar for about a year and a half and that is mainly due to its fundamental indicators. However, the stock drew my attention in the last few days because of a couple of technical indicators.

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First, while combing through charts over the weekend I noticed the trend that Akamai has been in over the last few years and how the lows from December 2018 and March 2020 connect to form a trend line that is currently around $90. I also took note of how the weekly stochastic indicators were on the verge of making a bullish crossover—a crossover that happened when the market opened on Monday. The stochastic indicators are in oversold territory and the last time they made a bullish crossover while fully in oversold territory was in December ’18.

This was the first bullish signal that jumped out at me. When I went to look at some other indicators on Tickeron.com, I couldn’t help but notice that the stock had gotten a short-term bullish signal from the A.I. trend prediction tool. The signal shows a confidence level of 90% that the stock will move higher over the next month.

The prediction from Tickeron is based more on daily technical indicators as opposed to the weekly indicators I first noticed. Despite the bullish signals, it was still the fundamentals that put the stock on my radar, so let’s take a look at the stock from that angle.

Strong Earnings Growth and Profitability Measurements Have Helped Propel Akamai Higher

Over the last three years, Akamai has seen earnings grow by 27% per year. EPS increased by 8% in the most recent earnings report and earnings are expected to increase by 8% in the current quarter. Revenue has increase at an annual rate of 8% per year over the last three years and it increased by 10% in the most recent report.

As for the profitability measurements, the company boasts a profit margin of 31.5% and a return on equity of 21.7%. Those two indicators, along with the sales growth, help the company score a 32 SMR rating from Tickeron. This puts the company in the top third of stocks in this category.

In addition to the SMR rating, Akamai also scores very well in the Profit vs. Risk Rating. The company gets a 17 in this category where 1 is the best score and 100 is the worst score.

Another area where we see above average ratings for the stock is in the valuation metrics. If we look at the P/E ratios, both the trailing and the forward, Akamai is priced lower than the industry average. The trailing P/E is 18.61 and the forward P/E is 17.98. The price-to-book ratio is at 3.72 on a trailing basis and 3.30 based on the forward earnings. Both of those measurements are below the industry average as well.

Despite the Growth and the Value, Sentiment is Only Average

One area of analysis that I feel is overlooked is the sentiment toward a stock. Indicators like analysts’ ratings and the short interest can give you an idea of how bullish or bearish investors are toward one stock compared to others. In the case of Akamai, the sentiment is very average.

There are 17 analysts covering the stock at this time and 12 have the stock rated as a “buy”. There are four “hold” ratings and one “sell” rating. If we look at the number of buy ratings as a percentage of the total ratings, Akamai’s buy percentage is 70.6%. From my own research I can tell you that the average buy percentage falls in the 65% to 75% range, meaning Akamai is right in the middle of the range.

Akamai’s short interest ratio is currently at 3.12 currently and that is also in the average range. The average short interest ratio, historically, falls in the 3.0 range. The average did seem to dip recently as the market rallied so sharply off of last March’s lows and the last leg higher from November through February also seemed to take a toll on short interest.

While it might seem like no big deal that the sentiment indicators are average, I think you have to look at them from relative standpoint. A company like Akamai with higher than average earnings and revenue growth, and low valuations, should be more loved than the average stock. But that’s not what we see with Akamai. I believe the sentiment toward the stock should be more bullish than it is.

The overall outlook for Akamai—the fundamental, the technical, and the sentiment analysis, all suggest to me that the stock should move higher over the next three to six months. I can see the stock moving back above the $120 over the next few quarters.