Ciena Corporation (CIEN) is a well-managed networker, and compared to its peers, and actually well diversified, too, with its hands in many fast-growing cookie jars, explains Mike Cintolo, editor of Cabot Growth Investor.
While the details of its products can give you an ice cream headache, the big idea is simpler — after many years of investments, Ciena is a leading provider of solutions to a variety of lucrative end markets, including webscale data center, 5G, fiber deep (putting fiber closer to users to deliver a better experience, which is key for over-the-top services and cord cutters), mobile and Internet of Things, with consistently growing market share.
And with growth in these markets picking up and Ciena executing flawlessly, the firm’s best days are ahead of it—sales and earnings growth have begun to accelerate, and the quarterly report from early December easily topped expectations.
Just as important to us given networking stocks’ on-again, off-again history, Ciena has a solid long-term outlook — the company upped its three-year growth outlook to 7%-ish revenue growth and 20% earnings growth.
This is up from 15% previously — though Wall Street is guessing the company is being conservative per usual; analysts see the firm’s earnings up 35% this fiscal year (which just started in November) and another 25% next year.
Ciena appears to be a top play in a new leading theme (5G and webscale infrastructure) during the next market upturn. As for the stock, it actually broke out of a three-year launching pad in September and has held up (and even poked to higher highs) during the market's implosion—a great sign the weak hands are already out.
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