The Spear Report Professional Edition Recommends Carrier Access (CACS)as a VOIP Play
In the Spear Report Professional Edition, we have been looking for ways to play the VOIP and FTTP telecom buildout. ADC Telecom (ADCT), is one way, but Carrier Access (CACS) is quite possibly a better way. CACS supplies a wide variety of gear that helps both telecom, cable and corporate customers upgrade and modernize. The company has over $100 million in cash and a great looking chart. Load the boat and forget about it for a year or two. You wont be sorry.
Bloomfield, CT (PRWEB) July 15, 2004 -- Isn't it just like a tech stock to have a PE of 78? While you won't find CACS passing our Buy List screens, which tend to be value focused, this is a stock that is distinguishing itself technically and appears to be in the right place at the right time. Tech stocks in general tend to sport high PE's and high growth rates simultaneously, and they are best bought at that time. When growth slows and PE's catch up, the momentum usually fades. That is the paradox in this sector.
Carrier Access, incorporated in September 1992, manufactures broadband access equipment for communications service providers. Its products are used to upgrade capacity and diversify both wireline and wireless communications networks. The company's 1,800+ customers include local and long distance carriers, cable operators and international communications providers.
One of their products, called the Customer Media Gateway (CMG), is a voice-over Internet protocol (VOIP) card that enables the gradual migration of voice and data services from traditional communication services to delivery over the Internet or cable, while preserving existing equipment investments. The platform offers service providers and small to medium-sized businesses a way to integrate Internet protocol (IP) and traditional switched voice services. The phone company is decentralizing; with CACS equipment every corporation that spends money on long-distance calls can now be their own Baby Bell.
CACS is also a player in the new optical FTTP (fiber-to-the- premises) space. Phone companies are searching for replacement revenue to make up for declining long distance rates and they are seeking to capitalize on their existing hookups into tens of millions of homes. FTTP is disruptive technology as it is infinitely upgradeable. Optical fiber to the premises leapfrogs traditional cable bandwidth, making it the killer app of the early 21st century. We're talking about speeds that are literally a thousand times faster than DSL and hundreds of times faster than cable broadband.
We expect the RBOCs to roll out FTTP at a measured pace, which will eventually enable them to far surpass the offerings of the cable companies....who will then need to roll out their own FTTP networks. This is the script for the next five to 10 years. The RBOCs are going to deploy a passive optical network, aka a PON. A PON uses passive components that require very little maintenance. But don't let the word 'passive' fool you. About $4 billion will be spent on FTTP equipment over the next six years, compared to just $30 million spent in 2003.
CACS makes a PON platform that enables service providers to deliver enhanced services, such as integrated high-speed data, Ethernet, voice and video services to businesses and multiple dwelling units. The CACS technology supports up to 32 devices from a single strand of fiber, which makes it ideal for small businesses as well.
For the three months ended 3/31/04, revenues totaled $28.5 million, up from $11.2 million. Net income totaled $2.7 million, up from $117 thousand. The company has over $100 million in cash and a great looking chart. Load the boat and forget about it for a year or two. You won't be sorry.
Profiled Stocks in The Spear Report
Every Friday, we deliver to our members our Buy List (the very best candidates for purchase that week) and we do something more. We profile two, three or even four stocks, in-depth, and include recommendations on when to buy these companies, and why.
Of the 145 companies we've profiled in The Spear Report (www.spearreport.com) editorial from January 1, 2003 through March 18, 2004 (that is, those that were recommended at least three months ago) the average return per company since the date profiled is 33.6%! Overall, 115 stocks are higher than the day they were profiled. That's a 79% accuracy rate. The average gain on the winners is +45.6%. Thirty stocks are lower than the day they were profiled. Their average loss is -12.5%. Amazing performance. To learn more about The Spear Report, go to: http://www.spearreport.com/tour/performance.php
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