Here's Why Bandwidth (BAND) is a Promising Portfolio Pick
Shares of Bandwidth Inc. BAND have surged 46.2% over the past six months, driven by improved market demand across its portfolio on the back of a dynamic business model and cost-effective operations. Earnings estimates for the current fiscal year have increased a stellar 516.7% since February 2022, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Founded in 2000 and headquartered in Raleigh, NC, Bandwidth operates as a Communications Platform-as-a-Service (CPaaS) provider, offering avant-garde software application programming interfaces for voice and messaging services. It is the only application programming interface (API) platform provider that owns a Tier 1 network with enhanced network capacity, primarily catering to business enterprises.
Bandwidth capitalizes on a variety of marketing channels to promote its products and services. This reinforces pricing flexibility and provides a significant competitive advantage to build a capital-efficient and customized networking infrastructure. The company follows a usage-based revenue model that enables it to simultaneously augment its top-line growth and increase subscriber base. Bandwidth generates a majority of its revenues from the CPaaS business in the United States. The company believes that its evolving portfolio and accretive customer base are the cornerstones of long-term growth across a diverse set of markets.
The company enables enterprises to rapidly scale communications functionalities to various applications and devices with its easy-to-use software APIs. It supports high user volumes without affecting deliverability and cost-effectively eliminates performance degradation. Bandwidth’s reduced capital expenditure requirements and lower marginal costs enable it to minimize total cost to customers. Continuous innovation on CPaaS offerings allows enterprise customers to have direct access to Bandwidth’s comprehensive suite of products and services that cater to the networking requirements of large-scale Internet companies and cloud service providers based in the United States.
It is undertaking the necessary steps to pursue international expansion opportunities, thereby strengthening its enterprise customer base overseas. Bandwidth established two data centers in Frankfurt and London and has been permitted to operate in 13 European countries, which includes 11 members of the European Union, the United Kingdom and Switzerland.
It has a long-term earnings growth expectation of 25% and delivered a solid earnings surprise of 301.8%, on average, in the trailing four quarters. The stock has a VGM Score of A.
Other Key Picks
Ooma Inc. OOMA, sporting a Zacks Rank #1, delivered an earnings surprise of 21.7%, on average, in the trailing four quarters. Earnings estimates for Ooma for the current year have moved up 37.8% since March 2022. It has a VGM Score of B.
Ooma offers communications services and related technologies for businesses and consumers in the United States and Canada. It helps to create powerful connected experiences for businesses and consumers through its smart cloud-based SaaS platform.
Arista Networks, Inc. ANET, sporting a Zacks Rank #1, is likely to benefit from the 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 experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 12.7%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Clearfield, Inc. CLFD, sporting a Zacks Rank #1, is a leading provider of communication networks, telecom services and support solutions. The company is witnessing a strong demand environment, largely driven by an effort by rural broadband operators to establish themselves as dominant broadband access providers. In addition, Clearfield is gaining traction with Tier 2 carriers that aim to extend their fiber connectivity across the country.
Headquartered in Minneapolis, MN, Clearfield has gained 17.8% over the past year. It delivered an earnings surprise of 39.7%, on average, in the trailing four quarters.
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