Networking Stocks: Built for Speed

08/04/2016 8:00 am EST


James Oberweis

President, Oberweis Asset Management, Inc.

Speed has always been the name of the game in technology, more so now than ever before. As the world becomes increasingly connected, demand for bandwidth to move information faster than ever before will remain in high demand, states Jim Oberweis, Jr., editor of The Oberweis Report.

This networking arms race is unlikely to end soon, and as an investor you can profit from what seems like exponential increases in demand for more and more bandwidth.

New addition Monolithic Power (MPWR) makes semiconductors that, among other things, enable networking and telecom infrastructure. The company has 1,142 patents issued or pending globally.

Its semiconductors are found in products such as networking infrastructure, computers, set-top boxes, cellular handsets, automobiles, and industrial meters.

In the company’s latest reported first quarter, sales increased 15% to $84.5 million from $73.5 million in the first quarter of last year.

Monolithic reported earnings per share of $0.45 in the latest reported first quarter versus $0.37 a share in the same quarter of last year.

Also added to our portfolio this month, Dycom (DY) provides engineering and construction services to telecom providers that connect high-speed fiber networks to the end customer.

The company’s growth is being driven by the increased demand for network reliability for video, voice, and data services.

The firm believes that it is in the early phase of a multi-year investment cycle as telecom and cable providers roll out 1 gigabit high-speed internet to homes and businesses.

In the company’s last reported third quarter sales increased approximately 35% to $664.6 million from $492.4 million in the third quarter of last year.

Dycom reported earnings per share of $1.08 in the latest reported third quarter versus $.52 in the same quarter of last year.

Clients of Oberweis Asset Management own approximately 5,500 shares. These shares may be appropriate for risk-oriented investors.

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