The 5G revolution is well underway and is expected to continue snowballing due to the increasing application of 5G across several industries. According to The Daily News, the global 5G market is expected to grow at a 55% CAGR over the next five years to $115.4 billion by 2026.
Furthermore, governments globally have been heavily investing in 5G, given its growing importance in autonomous driving and telemedicine. Indeed, the $1.2 trillion infrastructure bill passed by the Senate on August 10 has proposed a $65 billion spending for fast and reliable broadband infrastructure, affordability, and adoption.
Against this backdrop, we think it could be wise to bet on quality 5G stocks Viavi Solutions Inc. (VIAV) and NetScout Systems, Inc. (NTCT). Both stocks have overall A (Strong Buy) ratings in our proprietary POWR Ratings system.
Viavi Solutions Inc. (VIAV)
VIAV offers network test, monitoring, and assurance solutions to communications service providers, enterprises, network equipment manufacturers, government, and avionics customers worldwide. The company operates through three segments: Network Enablement; Service Enablement; and Optical Security and Performance Products. VIAV is headquartered in Milpitas, Calif.
VIAV announced a collaboration with Picocom on August 17, 2021, to provide complete test solutions for validating Open RAN base station components for small cell 5G networks. Jonus Chen, Vice President, Greater China, VIAV, said, “Industry-leading 5G network testing solutions from VIAVI, combined with Picocom’s expertise in small cell base station components and software, empowers the stringent end-to-end interoperability testing and performance validation that is necessary to advance Open RAN deployments.”
VIAV’s net revenue increased 16.6% year-over-year to $310.9 million in the fourth quarter, ended July 3, 2021. Its non-GAAP income from operations came in at $64.7 million, up 23.7% year-over-year. Also, its non-GAAP EPS was $0.22, up 22.2% year-over-year.
Analysts expect VIAV’s revenue and EPS to increase 6.0% and 4.8% year-over-year to $1.27 billion and $0.87, respectively, in its fiscal year 2022. In addition, it has surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 19.0% in price to close Friday’s trading session at $16.08.
VIAV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
VIAV has a B grade for Value, Growth, Stability, and Quality. Within the B-rated Technology – Communication/Networking industry, it is ranked #2 of 55 stocks. Click here to see the additional POWR Ratings for Momentum and Sentiment for VIAV.
NetScout Systems, Inc. (NTCT)
NTCT provides service assurance and cybersecurity solutions to protect digital business services against disruptions globally. Its unique products include nGeniusONE, nGeniusPULSE, nGenius Business Analytics solution, and ISNG. The Westford, Mass.-based company also offers cybersecurity solutions under the Arbor brand.
On July 27, 2021, NTCT introduced NETSCOUT Smart Edge Monitoring to give IT teams’ complete visibility and insights to assure the highest-quality end-user experience in any network or application regardless of where employees perform their jobs. This could lead to increasing demand for its solutions, considering the remote working trend.
NTCT’s total revenues increased 3.5% year-over-year to $190.27 million for the first quarter, ended June 30, 2021. Its non-GAAP income from operations came in at $21.78 million, up 5.5% year-over-year, while its non-GAAP net income came in at $14.96 million, up 22.4% year-over-year. Also, its non-GAAP EPS increased 17.6% year-over-year to $0.20.
For its fiscal year 2023, NTCT’s revenue and EPS are expected to grow 4.2% and 9.1%, respectively, year-over-year to $886.76 million and $1.92. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 20.7% in price over the past year to close Friday’s trading session at $26.84.
NTCT’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
In addition, it has an A grade for Growth and Value. NTCT is ranked #1 of 75 stocks in the Technology – Services industry. Click here to see the additional POWR ratings for NTCT (Quality, Stability, Sentiment, and Momentum).
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VIAV shares were trading at $16.07 per share on Monday afternoon, down $0.01 (-0.06%). Year-to-date, VIAV has gained 7.31%, versus a 20.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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