Two Small-Caps in the Cloud

09/16/2015 8:00 am EST

Focus: STOCKS

James Oberweis

President, Oberweis Asset Management, Inc.

Jim Oberweis, Jr., editor of The Oberweis Report, is a leading expert on small-cap stock. Here, he looks at two cloud-oriented tech plays that he feels are appropriate for risk-oriented investors.

Arista Networks (ANET) is a leading supplier of cloud networking solutions to address the needs of large-scale Internet companies, cloud service providers, and next-generation data centers for enterprises.

The company’s cloud networking solutions deliver industry leading performance, scalability, availability, programmability, automation, and visibility.

The core of the company’s cloud networking platform is fully programmable and modular. Unlike competitors, Arista uses standard Linux as its underlying operating system.

This allows customers to extend EOS software with off-the-shelf Linux applications and a growing number of open source management tools. Key customers include eBay (EBAY), Facebook (FB), Microsoft (MSFT), and Yahoo! (YHOO).

In the latest reported second quarter, sales increased 42% to $195.6 million from $137.9 million in the second quarter of last year.

Arista reported earnings per share of $0.54 in the second quarter versus $0.35 in the same quarter of last year. Clients of Oberweis Asset Management own approximately 7,400 shares.

Gigoptix (GIG) is a leading fabless supplier of high speed semiconductor components that enable end-to-end information streaming over optical and wireless networks.

Its products enable high speed (40 to 400 gigabit per second) end-to-end network connectivity for emerging high growth markets, such as long-haul and metro telecom applications and cloud data communications.

These markets are being driven by the insatiable demand globally for more bandwidth as smartphones and other Internet devices become more pervasive globally.

In the company’s latest reported second quarter, sales increased approximately 22% to $9.8 million from $8.0 million in the second quarter of last year.

Gigoptix reported earnings per share of $0.06 in the latest reported second quarter versus $0.01 in the same quarter of last year. Clients of Oberweis Asset Management own approximately 185,000 shares.

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