New Services to Change Sentiment
After losing 45% of its value in 2013 due to poor quarterly reports, the Wi-Fi solutions company Ruckus Wireless Inc (NYSE:RKUS) rallied with gains of 5% on Tuesday in response to a bullish call from Piper’s Gus Richard.
In a market where spectrum is crowded and data is growing faster than the capabilities to supply, a company such as Ruckus Wireless Inc (NYSE:RKUS) could present a grand opportunity. Richard explains that the company’s new Wi-Fi products should gain traction among both consumers and businesses over the next five years due to their ability to save on costs.
Richard estimates that two-thirds of all mobile data traffic will be offloaded onto Wi-Fi and small cell networks within five years, which benefits a Wi-Fi solutions company. Richard specifically notes Hotspot 2.0, a new service integrated with Apple’s new iOS, which will allow consumers to seamlessly connect to Wi-Fi networks when the consumer enters its range. This ultimately saves money for the consumer.
All of Ruckus Wireless Inc (NYSE:RKUS)’ products were similar to Hotspot 2.0. Thus, there is value to the company. Last quarter, it grew revenue by 27.2% and maintains operating margins above 6%. After its large loss the stock is trading at just four times sales. As a result, I think expectations now reflect fundamentals and that Ruckus Wireless Inc (NYSE:RKUS) is a “Buy” with new products hitting the market.
Final Thoughts
Strangely enough, these companies are rarely discussed. Cree, Inc. (NASDAQ:CREE) has been one of the market’s best performing stocks, but has very little coverage. Ruckus Wireless Inc (NYSE:RKUS) has been one of the market’s worst performing stocks in 2013 and Textura Corp (NYSE:TXTR) is one of the hottest IPOs of the year, albeit under-the-radar.
In my opinion, each of these three tech stocks is attractive, and they are presenting different levels of value. If I had to pick one, I think Cree, Inc. (NASDAQ:CREE) is looking the best. The company announced its new bulbs in March, therefore its success was not priced into quarterly expectations. If Goldman is correct, this could signal significant gains when the company reports earnings.
Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends Ruckus Wireless. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Under-the-Radar Tech Upgrades That You Should Note originally appeared on Fool.com is written by Brian Nichols.
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