UI Surges 215% in the Past Year: Should You Bet on the Stock Now?

Shares of Ubiquiti Inc. UI have surged 214.5% 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 #2 (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 (Strong Buy) stocks here.Image Source: Zacks Investment ResearchFactors Propelling UIUbiquiti 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 boasts 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 the 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. The company is witnessing healthy traction in the Enterprise Technology segment, driven by the growing proliferation of IoT devices across industries. Ubiquiti’s payout rate stands at 37.2%. The healthy payout rate delivers decent returns to investors while maintaining financial flexibility for future investments. The company is steadily improving its free cash flow over the last few quarters. This highlights efficient resource management and implies Ubiquiti is well-positioned to invest in growth initiatives and pay debt and dividends.Inventory Optimization Buoys UIThe 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 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 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 ConsiderInterDigital, 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 whole range of advanced technology solutions for use in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.Qualcomm Incorporated QCOM, 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.Arista Networks, Inc. ANET, carrying a Zacks Rank #2, 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.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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 QUALCOMM Incorporated (QCOM): 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 ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks