One Guy's Investments: Annual Checkup -- AKAM

I haven't written very much about my holdings in Akamai (AKAM) since I opened my position early this year. It has been a great performer of late, and my shares that were purchased at an average cost of $14.26 are up very nicely, thanks very much. But I think the growth continues from here, and Akamai is valued pretty fairly at a forward PE of about 30 using what I think are pretty conservative estimates. Akamai makes web traffic more reliable and fast, especially for those who host bandwidth-intensive operations -- think itunes, streaming video and audio, or downloaded software. As large files traverse the web with more and more regularity and ecommerce demands require more predictably reliable and fast delivery, Akamai will be the one proven provider of this service. Their acquisition of their main rival, Speedera, has lowered their margins temporarily but increased their sales presence significantly, and I think more dramatic growth is possible in the next few years. Google is a possible threat if they can put their network toward similar use, but that doesn't seem to be their focus and Akamai already has a huge and recurring customer base -- more likely, in my feeble mind, is a Google acquisition of Akamai (admittedly, that would have made more sense a few months ago when Akamai was a $2 billion company instead of $3 billion ... but GOOG definitely has the cash if they want to make an offer).

Labels: AKAM