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Here's Why Viavi (VIAV) is a Smart Investment Option Now

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Viavi Solutions Inc.’s (VIAV - Free Report) current-fiscal earnings estimates have moved up 17.9% since July 2020-end, while that for the next fiscal has risen 6.4%, implying healthy growth potential. Despite market volatility, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Drivers

Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain, and optimize complex physical and virtual networks. The company’s wireless and fiber test solutions are in the early stages of a multi-year investment cycle, fueled by the transition of OEMs and service providers to super-fast 5G networks. The healthy growth traction is further demonstrated by the upside in wireless & fiber test, 3D sensing products, optical transport, Ethernet, broadband access, video test and storage network testing markets.

The 5G transition is expected to be disruptive in nature, potentially creating new avenues for industries across the board. 5G is likely to augment the scalability, security and universal mobility of the telecommunications industry, thus propelling the proliferation of IoT. Telecom firms are enabling customers to move away from an economy-of-scale network operating model to demand-driven operations. They are ensuring seamless migration to 5G by offering easy programmability and flexible automation. The convergence of network technologies requires significant investments from both traditional carriers (telecom and cable) and cloud service providers. Viavi’s solutions are well positioned to meet these rapidly changing industry trends, given its technology prowess, product depth and wide customer base.

Viavi reported decent second-quarter fiscal 2021 results (ended Jan 2, 2021) wherein the top and the bottom line beat the Zacks Consensus Estimate. For the third quarter of fiscal 2021 (ending Apr 3, 2021), the company expects non-GAAP earnings in the band of 16-18 cents per share on revenues of $280-$300 million. Demand for sophisticated anti-counterfeiting features, which consumers can easily validate without the use of special tools but are difficult to create or simulate using conventional printing technology, has led to exponential growth of Viavi’s OSP segment. The custom optics products of the company offer an array of advanced technologies and precision optics to meet the specific requirements of customers. Its 3D sensing optical filters and Engineered Diffusers are deployed in smartphones for facial recognition biometric authentication. In addition, optical filters and sensors deployed in autonomous vehicles and IoT devices offer lucrative opportunities for the company.

Shares of the company have gained 20% in the past year compared with the industry’s rise of 37.7%.

Other Key Picks

Some other top-ranked stocks in the industry are Knowles Corporation (KN - Free Report) and Plantronics, Inc. (PLT - Free Report) , sporting a Zacks Rank #1, and Corning Incorporated (GLW - Free Report) carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Knowles has a long-term earnings growth expectation of 10%. It delivered an earnings surprise of 19.3%, on average, in the trailing four quarters.

Plantronics delivered a trailing four-quarter earnings surprise of 560.4%, on average.

Corning has a long-term earnings growth expectation of 2%. It delivered an earnings surprise of 41.6%, on average, in the trailing four quarters.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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