Ubiquiti Skyrockets 184% in a Year: Worth Betting on UI Stock Now?

Shares of Ubiquiti Inc. UI have surged 184.1% 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 ResearchKey Growth Drivers of UIWith the wide proliferation of the Internet and exponential growth in demand for data traffic driven by bandwidth-intensive applications like video, audio, online gaming and social networking, the need for faster and seamless connectivity has increased manifold. To address these higher broadband access needs, wireless networks have emerged as an attractive alternative to traditional wired networks, as these require relatively lower capital investments and operating costs than the latter. New York, NY-based Ubiquiti perfectly fits this bill with 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 provide 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. Ubiquiti maintains a proprietary network communication platform 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.UI Rides on Solid Growth TractionUbiquiti aims to benefit from significant growth opportunities in both emerging and developed economies. These include a 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.Moreover, 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 and 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 to develop 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 boosting 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, the reduction of labor-related costs is 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 ConsiderArista Networks, Inc. ANET, carrying a Zacks Rank #2 (Buy) at present, 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. Corning Incorporated GLW, currently carrying a Zacks Rank #2, is a leading provider of advanced glass substrates that are used in various applications across multiple markets, such as display technologies, optical communications, environmental technologies, specialty materials and life sciences businesses. It offers several products focused on the data center, with a portfolio consisting of optical fiber, hardware, cables and connectors, enabling it to create optical solutions to meet evolving customer needs. Corning has a long-term earnings growth expectation of 14.9%. InterDigital, Inc. IDCC 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 wide range of advanced technology solutions for use in digital cellular, as well as wireless 3G, 4G, and IEEE 802-related products and networks.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Corning Incorporated (GLW): Free Stock Analysis Report InterDigital, Inc. (IDCC): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report Ubiquiti Inc. (UI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks