Today’s Top Pick for 2014 is a wireless networking company whose earnings are forecast to double this year.
Ubiquiti Networks (UBNT)
from BI Research
Ubiquiti Networks (UBNT) is my top pick for 2014. The Company is truly a disruptive, R&D-focused, wireless networking company. By “wireless networking”, I mean products that deliver carrier class wireless networking performance for video, voice and data that can support both indoor and outdoor wireless networks and can scale to hundreds for clients per base station. Ubiquiti’s products for these applications include the world’s first sub-$100 router capable of 1 million packets per second; a line of wireless backhaul products; and enterprise level products including Wi-Fi systems, its AirCam video surveillance cameras, and its mFi line-up of machine to machine remote monitoring/control products.
By “R&D-focused”, I mean a whopping 65% of its employees are engineers who are hands-on—actually developing and designing networking products. And by “disruptive”, I mean that the Company identifies a market/product, includes only the design features actually used by about 85% of users, deploys its proprietary technologies to design a better product, skips all the bells and whistles most don’t use that drive up the price (along with skipping a lot of the top heavy corporate overhead structure)—and then prices it way below the competition—up to 80% below the competition.
And its products are so good that it has sold over a billion dollars’ worth of them in the past few years—without a sales force (which certainly helps it price its products lower)—just via word of mouth and through its 100,000 member Ubiquiti Network Forum.
So how’s this working for them? EPS was $.91 for FY 6/13, and the consensus sees that doubling to $1.83 in FY 6/14 on 70% sales growth, to $545 million. And just in Q1 alone, the Company generated $52 million in free cash flow. The Vice President of Qualcomm recently forked over more than $1.1 million dollars to double his position in the Company, at around $38.
Tom Bishop, BI Research, www.biresearch.com, December 26, 2013