Top Picks Mid-Year Updates: Avid Technology

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Just before the market had its historic November to remember — with the small-cap rally that pushed the Russell 2000 index of small-cap stocks up a record breaking 18.3% — Avid Technology (AVID) rose to the top of our fundamental and technical screens.

Avid was added to our newsletter portfolio on Nov. 13, 2020 at $10.69 following our Following our “Best Months” Seasonal MACD Buy Signal on Nov. 5, 2020. The stock had exhibited relatively low price-to-sales and price-to-earnings ratios while their sales and earnings numbers fared well in Q2 and Q3.

Avid Tech is at the forefront of the digital media revolution and boasts a stable of industry leading software solutions and partnerships. When the economy recovered from the COVID-19 downturn, many ramped up digital media production and publishing, and Avid revenue and paid subscriptions picked up.

Avid’s open and efficient media platform and comprehensive tools are being used to create, produce, distribute, and monetize feature films, television, music recordings, and live events.

We sold half our AVID position in the newsletter portfolio on Feb. 4 when the stock doubled from our entry price in keeping with our standard rule of selling half on a double, which allows you to take your initial investment off the table and let your winnings ride.

AVID Q1 revenues and earnings beat estimates as it has for the past several quarters by about 40% and 4%, respectively, on 78.2% year-over-year subscription revenue growth and net increase of approximately 28,000 paid subscriptions during the quarter.

They have teamed up with Dolby on a joint training course agreement to bring the first Pro Tools® Dolby Atmos training course and certification to market and with Remote Picture Labs, a leading provider of remote editing solutions for the Hollywood film and television industry, a virtual film and television post production solution that allows editors, assistant editors, and producers to collaborate from anywhere. And AVID presented at J.P. Morgan 49th Annual Global Technology, Media, and Communications Conference in May.

As we are two months into the "Worst Six Months" for stocks (May-October) and on the cusp of the Worst Four Months (July-October), the stock is now on Hold. That is a true Hold. If you own, we do not suggest selling.

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