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3 Stocks to Play the WLAN and WiFi Networks Momentum - Analyst Blog

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The growing momentum of wireless networks is expected to catalyze future growth of the overall telecommunications industry. Wireless network standards are continuously evolving around the globe aiming to provide faster data transmission speeds.

Large business enterprises generally have a point of presence throughout the world. Thus a strong and efficient wireless network is of utmost importance to these companies in order to maintain seamless connection with remote operation sites.

WiFi Hotspots Thrive in the U.S.

The U.S. is currently witnessing a boom in WiFi networks. At present, more than 50% data transmission by smartphone users is taking place over WiFi networks. Research firm WeFi Inc. has projected that the number of commercial WiFi hotspots is expected to reach 10.55 million in the U.S. by 2018. Meanwhile, cloud-managed WiFi network has become the most efficient technology for large business houses.

WLAN Gains Momentum

The strong growth of both enterprise and consumer wireless local area network (WLAN) markets has become a new growth driver for wireless operators. According to research firm IDC, the global enterprise WLAN segment grew 7.7% over the prior-year quarter and global consumer WLAN segment witnessed a 10.9% growth from the year-ago quarter, in the second quarter of 2014. WLAN provides network connection over a short distance through wireless mediums such as radio or infrared signals.

Our Picks

As demand for WLAN and WiFi networks picking up, WLAN/WiFi solution providers and infrastructure developers are expect to gain significantly. At this stage, we believe investors should choose stocks which carry a favorable Zacks Rank to cash on future growth opportunities. Taking these factors into account, we present three Zacks Rank #2 (Buy) stocks for investors to consider:

Aruba Networks Inc. ( ARUN ): Being a major solutions provider of WLAN environment and secure WiFi client access solutions, Aruba Networks has operations throughout the Americas, Europe, the Middle East and the Asia Pacific region.

For fiscal 2015, the Zacks Consensus Estimate for earnings stands at 44 cents, indicating year-over-year growth of a whopping 356.47%. Notably, the Zacks Consensus Estimate for earnings increased 9 cents over the last 30 days. For fiscal 2015, the Zacks Consensus Estimate for total revenue stands at $860 million, up 18% year over year.

Ruckus Wireless Inc. ( RKUS ): The company is a leading solutions provider and infrastructure developer for carrier-class WiFi solutions and virtual WLANs. Ruckus Wireless sells its products to enterprise customers in various industries as well as to mobile operators, cable companies, wholesale operators and fixed-line carriers.

For fiscal 2014, the Zacks Consensus Estimate for earnings stands at 15 cents, indicating year-over-year growth of an enormous 633.33%. The earnings estimate has gained 10 cents over the last 60 days. Ruckus has witnessed a positive average earnings surprise of a significant 250% in the last four reported quarters. For fiscal 2014, the Zacks Consensus Estimate for total revenue stands at $400 million, up 20.85% year over year.

Meru Networks Inc. ( MERU ): The company provides virtualized WLAN solutions in the Americas, Europe, the Middle East, Africa and the Asia Pacific region. Meru Networks sells its products and services to education, finance, government, healthcare, hospitality, manufacturing, retail, technology, telecom, transportation and utilities markets.

For fiscal 2014, the Zacks Consensus Estimate for earnings stands at negative 64 cents. Although this figure indicates a decline of 16.36% year-over-year, the estimate has actually improved by 15 cents over the last 60 days. Meru has also witnessed a positive average earnings surprise of almost 4% in the last four reported quarters.

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ARUBA NETWORKS (ARUN): Free Stock Analysis Report

RUCKUS WIRELESS (RKUS): Free Stock Analysis Report

MERU NETWORKS (MERU): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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