For aggressive investors, the technology industry has long offered the most exciting opportunities for rapid growth, as the world’s appetite for data transfer storage and analysis continues to grow, notes Timothy Lutts, editor of Cabot Stock of the Week.

Recent years have seen the cloud take center stage and Arista Networks (ANET) is a play on that, as its equipment works at the edge of the cloud. Arista has always been a leader in this space, with multilayer network switches and software-driven networking solutions for cloud data centers and other (usually big) computing environments.

In the third quarter, Arista boasted eye-opening sales growth and deft supply chain management along with an enticing buyback program. The company reported estimate-beating revenue of $749 million, up 24% from the prior year and up 6% sequentially, with per-share earnings of $2.96 beating the consensus by 23 cents.

Despite facing “acute” supply chain challenges in Q3, Arista’s gross profit margin was a solid 65%, within the firm’s long-term estimated range thanks to healthy higher-margin software and services sales. Arista’s efforts in expanding its reach beyond large cloud data centers are bearing fruit, as its campus (smaller enterprise) business is expected to double to $200 million in 2021 and double again next year.

Management expressed confidence in the outlook by increasing its share repurchase program by $1 billion (worth 2.5% of the current market cap), as well as announcing a four-for-one stock split.

More important, Arista thinks the best is yet to come. Management sees 2022’s sales growth accelerating to 30% (up from 25%-ish this year), well above analysts’ expectations, and revenue expanding at a 15% compound annual rate in the next five years (reaching annual revenue of $5 billion by 2025) based on exploding demand from cloud computing customers.

As for the stock — which has been public since 2013 — the earnings report in early November sparked a big gap up, and the stock has been consolidating that gain since, building a base for the next advance. Aggressive investors can buy here.

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