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UI Stock Appears a Solid Investment Bet Now: Here's Why
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Shares of Ubiquiti Inc. (UI - Free Report) have surged 146.3% over the past year, driven by an accretive customer base and healthy revenues on the back of a flexible business model.
Ubiquiti offers a comprehensive portfolio of networking products and solutions. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing. Its enterprise product platforms offer wireless LAN infrastructure, video surveillance products and machine-to-machine communication components.
Backed by a rapidly growing and highly engaged community of service providers, distributors, value-added resellers, systems integrators and corporate IT professionals, referred to as the Ubiquiti Community, the company’s business model is highly flexible and adaptable to market demands. The company maintains a proprietary network communication platform that is committed to reducing operational costs by using a self-sustaining mechanism for rapid product support and dissemination of information by leveraging the strength of the Ubiquiti Community.
Ubiquiti aims to benefit from significant growth opportunities in both emerging and developed economies. These include relentless pursuit by emerging countries to stay connected with the world through the adoption of wireless networking infrastructure as developed economies aim to bridge the demand-supply gap for higher bandwidth.
UI Focusing on Optimization of Inventory Levels
The company’s effective management of its strong global network of more than 100 distributors and master resellers has improved its visibility for future demand as well as inventory management techniques. The company has also made significant investments to optimize inventory levels by reducing lead times, meet increasing demand and support the growing number of customers. Ubiquiti follows a scalable community-led approach based on product feedback from customers, while periodic reporting by channel partners has added to operational strength. We expect this resilient business model to contribute significantly to its growth momentum through disruptive price offerings.
In addition, Ubiquiti spends significantly on research and development (R&D) activities for developing innovative products and state-of-the-art technology to expand its addressable market and stay on the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus raising the top line. It upgraded the UniFi ecosystem, which includes hotspot analytics and high-density WLAN improvements, and added new features to the AmpliFi product family. The company’s strategic product launches at disruptive prices helped it beat rivals to a great extent. Apart from launching products, reducing labor-related costs also remains one of the chief highlights of the R&D initiatives. The company believes investments in R&D, inventory and operations management will help it expand the addressable market and maintain its dominant foothold in the industry. Consequently, the stock appears to be an enticing investment option in the volatile market.
Other Stocks to Consider
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 15%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista delivered an earnings surprise of 14.8%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2, is another solid pick. The company is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. Qualcomm is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge.
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UI Stock Appears a Solid Investment Bet Now: Here's Why
Shares of Ubiquiti Inc. (UI - Free Report) have surged 146.3% over the past year, driven by an accretive customer base and healthy revenues on the back of a flexible business model.
With healthy fundamentals, this Zacks Rank #1 (Strong Buy) wireless equipment manufacturer appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Key Growth Drivers for UI
Ubiquiti offers a comprehensive portfolio of networking products and solutions. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing. Its enterprise product platforms offer wireless LAN infrastructure, video surveillance products and machine-to-machine communication components.
Backed by a rapidly growing and highly engaged community of service providers, distributors, value-added resellers, systems integrators and corporate IT professionals, referred to as the Ubiquiti Community, the company’s business model is highly flexible and adaptable to market demands. The company maintains a proprietary network communication platform that is committed to reducing operational costs by using a self-sustaining mechanism for rapid product support and dissemination of information by leveraging the strength of the Ubiquiti Community.
Ubiquiti aims to benefit from significant growth opportunities in both emerging and developed economies. These include relentless pursuit by emerging countries to stay connected with the world through the adoption of wireless networking infrastructure as developed economies aim to bridge the demand-supply gap for higher bandwidth.
UI Focusing on Optimization of Inventory Levels
The company’s effective management of its strong global network of more than 100 distributors and master resellers has improved its visibility for future demand as well as inventory management techniques. The company has also made significant investments to optimize inventory levels by reducing lead times, meet increasing demand and support the growing number of customers. Ubiquiti follows a scalable community-led approach based on product feedback from customers, while periodic reporting by channel partners has added to operational strength. We expect this resilient business model to contribute significantly to its growth momentum through disruptive price offerings.
In addition, Ubiquiti spends significantly on research and development (R&D) activities for developing innovative products and state-of-the-art technology to expand its addressable market and stay on the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus raising the top line. It upgraded the UniFi ecosystem, which includes hotspot analytics and high-density WLAN improvements, and added new features to the AmpliFi product family. The company’s strategic product launches at disruptive prices helped it beat rivals to a great extent. Apart from launching products, reducing labor-related costs also remains one of the chief highlights of the R&D initiatives. The company believes investments in R&D, inventory and operations management will help it expand the addressable market and maintain its dominant foothold in the industry. Consequently, the stock appears to be an enticing investment option in the volatile market.
Other Stocks to Consider
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 15%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experiences. Arista delivered an earnings surprise of 14.8%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2, is another solid pick. The company is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. Qualcomm is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge.