Why Allot Shares Climbed a Lot

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of service optimization supplier Allot Communications popped 12% today after receiving a new multimillion dollar order from a U.S.-based cloud provider for its Deep Packet Inspection-enabled Service Gateway solution.

So what: The stock has been crushed over the past year on concerns over declining revenue, but today's big deal reignites optimism over Allot's long-term growth prospects. While financial details of the agreement weren't disclosed, the order alone suggests that Allot's Deep Packet technology does have some significant advantages in terms of scalability and reliability over its rivals.

Now what: The solution will be deployed in multiple data centers worldwide. "More and more enterprises are adopting a cloud approach to providing business applications," said Allot CEO Vin Costello. "The Allot Service Gateway ensures that data and services will flow smoothly between the customers' premises and the data centers, thus preventing congestion and ensuring quality of service." More important, with the stock still off about 45% from its 52-week highs and trading at a PEG ratio of 1, there's plenty of room for investors to benefit from today's big contract win.

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The article Why Allot Shares Climbed a Lot originally appeared on Fool.com.

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