Personal Finance

How Risky Is Sierra Wireless Inc. (USA) Stock?

SWIR Cash and Equivalents (Quarterly) Chart

Sierra Wireless (NASDAQ: SWIR) is often called a " pure play " on the Internet of Things (IoT), which connects various gadgets to each other and the cloud. Sierra is the world's largest manufacturer of 2G, 3G, and 4G LTE embedded modules and gateways for those devices, and the stock almost hit $50 per share in late 2014 on rising expectations for the IoT market.

SWIR Cash and Equivalents (Quarterly) Chart

Source: YCharts .

This indicates that Sierra exercises cautious cost controls, and that it can continue growing inorganically to expand its IoT footprint and offset top line declines. If cash levels fall but interest rates remain low, it can take on debt to keep expanding.

The valuations and verdict

Sierra Wireless' future might look murky, but I believe that its price-sales ratio of 0.8 and enterprise value-sales ratio of 0.6 will limit its downside potential, even if sales keep declining in the near term.

Therefore, I don't think Sierra is a risky play at current prices, and its stable cash flow and clean balance sheet should soften the blow of its top and bottom line declines -- as long as they eventually recover. So if you're a patient investor who can stomach some near-term volatility, I believe that Sierra's long-term rewards should outweigh the near-term risks.

A secret billion-dollar stock opportunity

The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

Leo Sun owns shares of Cisco Systems. The Motley Fool owns shares of and recommends Sierra Wireless and Verizon Communications. The Motley Fool recommends Cisco Systems. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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.

In This Story


Other Topics


Latest Personal Finance Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More