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Here's Why Cambium (CMBM) is a Promising Portfolio Pick

Shares of Cambium Networks Corporation CMBM have surged 38.8% over the past six months, driven by improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current fiscal have increased 65.3% since July 2022, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock 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.

Zacks Investment Research
Zacks Investment Research

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Growth Drivers

Headquartered in Rolling Meadows, IL, Cambium operates as a wireless solutions provider, connecting people with a flexible network infrastructure. Backed by dynamic business fundamentals, the company has a broad portfolio of fixed wireless broadband and Wi-Fi networking solutions. The innovative offerings enable the creation of a unified wireless fabric that spans across multiple frequencies of Wi-Fi, managed centrally via the cloud.

The company capitalizes on its cloud-based network management software that enables operators to seamlessly design, deploy and manage their networks from cloud to tower to edge. These streamlined operations minimize several network performance complexities with utmost agility. Cambium also offers a variety of other network management tools, such as cnMaestro, XMS Cloud, cnHeat, cnArcher, to enhance ease of use and network performance.

Its solutions have been particularly designed to function under harsh conditions while remaining aligned with demanding performance specifications required by various industries. These avant-garde solutions enhance economies of scale for network operators by supporting a large number of customer premise equipment per fixed wireless access point and reduce ongoing management costs through embedded software and device reliability. Despite challenging market conditions stemming from the COVID-19 pandemic, increased demand for wireless infrastructure projects owing to higher requirements for work-from-home connectivity solutions bolster Cambium’s robust business model.

The company is well-positioned to benefit from proprietary software and product ramp-ups, which will likely enable it to deliver a compelling combination of price, performance and spectrum efficiency. One of the major advantages of Cambium is its fixed wireless broadband networking infrastructure solutions, which are distinguished by embedded intelligence and scalability. Markedly, the majority of its revenues are derived from PTP and PMP solutions.

PTP solutions are connected to high-bandwidth wireline networks in a bid to transport wireless broadband backhaul to facilities. PMP solutions are mainly used to backhaul video surveillance systems. The company believes that growth in data traffic is likely to be primarily driven by the addition of applications and connected devices used for both enterprise and service provider use cases. Moreover, with the rapid transition to Wi-Fi 6 solutions, Cambium witnessed major improvements in enterprise Wi-Fi solutions supported by improved field deployments.

Some of its competitive strengths are advanced RF signal algorithms that boost network performance with evolving technologies like noise filtering and frequency reuse and efficient wireless fabric that enables operators to strengthen their networks with incremental fixed wireless access points. Its cloud-based network management software acts as a major tailwind that simplifies the overall deployment process through hassle-free configuration and monitoring. Continued investments in wireless fabric and embedded software capabilities with expanded channel partner relationships are the cornerstones of its long-term growth across a diverse set of markets.

Cambium intends to augment its geographical footprint by collaborating with major network operators, thereby driving its product adoption across various end markets. Amid the rapid 5G shift, accretive investments in high-speed wireless networks are likely to position its portfolio to secure lucrative opportunities in the long run. Over the past few years, it has benefited from investments related to gigabit wireless solutions such as 60 GHz millimeter wave products and Wi-Fi 6.

It has a long-term earnings growth expectation of 16% and delivered a positive earnings surprise of 109.3%, on average, in the trailing four quarters.

Other Key Picks

TESSCO Technologies Incorporated TESS, sporting a Zacks Rank #1, delivered an earnings surprise of 126.1%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 44.3% since November 2021.

TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.

Harmonic Inc. HLIT, carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 48.6% since March 2021.

Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.

AudioCodes Ltd. AUDC, sporting a Zacks Rank #1, is likely to benefit from the secular tailwinds related to IP-based communications. Incorporated in 1992 and headquartered in Lod, Israel, it offers advanced communications software, products and productivity solutions for the digital workplace. It has a long-term earnings growth expectation of 9%.

AudioCodes aims to leverage its long-term partnership with Microsoft to further strengthen its market position. It is also likely to benefit from its continued focus on high-margin businesses.

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Harmonic Inc. (HLIT) : Free Stock Analysis Report

AudioCodes Ltd. (AUDC) : Free Stock Analysis Report

TESSCO Technologies Incorporated (TESS) : Free Stock Analysis Report

Cambium Networks Corporation (CMBM) : Free Stock Analysis Report

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