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Here's Why Cambium (CMBM) is a Solid Investment Option Now

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Shares of Cambium Networks Corporation (CMBM - Free Report) have surged an astronomical 1022.1% over the past year, driven by improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current and the next fiscal have increased 101.6% and 64.5%, respectively, over the past year, implying robust inherent growth potential. With healthy fundamentals, 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

Headquartered in Rolling Meadows, IL, Cambium operates as a wireless solutions provider, connecting people with a flexible network infrastructure. Backed by dynamic business fundamentals, the company has a broad portfolio of fixed wireless broadband and Wi-Fi networking solutions. The innovative offerings enable the creation of a unified wireless fabric that spans across multiple frequencies of Wi-Fi, managed centrally via the cloud. The company capitalizes on its cloud-based network management software that enables operators to seamlessly design, deploy and manage their networks from cloud-to-tower-to-edge. These streamlined operations minimize several network performance complexities with utmost agility.

Cambium also offers a variety of other network management tools, such as cnMaestro, XMS Cloud, cnHeat, cnArcher, to enhance ease of use and network performance. Its solutions have been particularly designed to function under harsh conditions while remaining aligned to demanding performance specifications required by various industries. These avant-garde solutions enhance economies of scale for network operators by supporting a large number of customer premise equipment per fixed wireless access point and reduce ongoing management costs through embedded software and device reliability.  Despite challenging market conditions stemming from the COVID-19 pandemic, increased demand for wireless infrastructure projects owing to higher requirements for work-from-home connectivity solutions bolster Cambium’s robust business model.

The company is well positioned to benefit from a proprietary software and product ramp up, likely facilitating it to deliver a compelling combination of price, performance and spectrum efficiency. One of the major advantages of Cambium is its fixed wireless broadband networking infrastructure solutions, which are distinguished by embedded intelligence and scalability. Markedly, majority of its revenues are derived from PTP and PMP solutions. PTP solutions are connected to high-bandwidth wireline networks in a bid to transport wireless broadband backhaul to facilities. Meanwhile, PMP solutions are mainly used to backhaul video surveillance systems. The company believes that growth in data traffic is likely to be primarily driven by addition of applications and connected devices used for both enterprise and service provider use cases. Moreover, with rapid transition to Wi-Fi 6 solutions, Cambium witnessed major improvements in enterprise Wi-Fi solutions supported by improved field deployments. Its upcoming 5G 28 GHz millimeter wave products are expected to be launched in 2021, which are likely to boost its business operations in the global market.

Some of its competitive strengths are advanced RF signal algorithms that boost network performance with evolving technologies like noise filtering and frequency reuse and efficient wireless fabric that enables operators to strengthen their networks with incremental fixed wireless access points. Its cloud-based network management software acts as a major tailwind that simplifies the overall deployment process through hassle-free configuration and monitoring. Continued investments in wireless fabric and embedded software capabilities with expanded channel partner relationships are the cornerstones of its long-term growth across a diverse set of markets. The company intends to augment its geographical footprint by collaborating with major network operators, thereby driving its product adoption across various end markets. Amid rapid 5G shift, accretive investments in high-speed wireless networks are likely to position its portfolio to secure lucrative opportunities in the long run. Over the past few years, it has benefited from investments related to gigabit wireless solutions such as 60 GHz millimeter wave products and Wi-Fi 6. Markedly, the first phase of the Rural Digital Opportunity Fund is expected to boost the deployment of broadband service among the underserved communities and help bridge the digital gap over the next 10 years.

It has a VGM Score of B and delivered a positive earnings surprise of 128%, on average, in the trailing four quarters.

Other Key Picks

Some other top-ranked stocks in the industry are Ooma, Inc. (OOMA - Free Report) , Nokia Corporation (NOK - Free Report) , and Clearfield, Inc. (CLFD - Free Report) , each carrying a Zacks Rank #2.

Ooma delivered a positive earnings surprise of 163.7%, on average, in the trailing four quarters.

Nokia has a long-term earnings growth expectation of 1.5%. It delivered a positive earnings surprise of 40.2%, on average, in the trailing four quarters.

Clearfield delivered a positive earnings surprise of 79.8%, on average, in the trailing four quarters.

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