Super Bowl Shock: How This Small-Cap Stole the Show

by Jonathan Rodriguez
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Super Bowl Shock: How This Small-Cap Stole the Show

Louis BaseneseOh, what a night…

Three weeks ago, Tom Brady marched his New England Patriots to perhaps the most thrilling comeback victory in Super Bowl history.

At halftime, pop diva Lady Gaga put on a captivating concert for the raucous in-house crowd and millions watching around the world.

As you may know, the Super Bowl routinely draws more than 100 million viewers every year.

And from an investment standpoint, brand-name companies that get “face time” on the tube — in the game or through commercials — often see a tangible boost in share price after the big game.

But this year, the biggest Super Bowl-driven stock pop wasn’t from a well-known brand.

Instead, it’s a tiny tech services company that trades for just under $6 a share.

Senior analyst Jonathan Rodriguez brings you all the details below.


Data: The Backbone of Modern Civilization

Jonathan RodriguezIn the developed world, data play an ever-increasing role in people’s daily lives.

Personal computers, cellphones, cars that connect to the internet — you name it.

But perhaps the only thing more critical to our data-driven lives than the data are the speed and reliability to access them.

This is especially true for businesses that rely on networks to get their job done.

So as you can imagine, the providers of today’s network technology are very valuable companies.

In fact, the enterprise network equipment market is expected to hit $30.6 billion by 2020, according to a report from Strategyr.

Most tech investors are familiar with the big names in the networking tech game: Cisco Systems Inc., Juniper Networks Inc. and Arista Networks Inc.

But these mature large caps won’t provide you with the kind of explosive returns on which you can retire early.

Instead, here’s a network tech company that could do the trick…

Unlock Extreme Profits in a Small-Cap Package

Extreme Networks Inc. (EXTR) is a networking solutions provider focused on enterprise clients.

Its products include modular ethernet switching systems, high density Wi-Fi equipment and management software.

But what really gave the company visibility was Extreme’s multiyear deal with the NFL for Wi-Fi and analytics software.

Extreme not only provided the Wi-Fi infrastructure for the Super Bowl in Houston, but also deep analytics on network usage to the NFL.

For instance, Extreme reported that a record-breaking 11.7 TB of data were transferred over the network at NRG Stadium during the Super Bowl.

The company also managed to handle 27,191 peak concurrent users onto the network — another record.

Perhaps the most important record broken was that of speed: Extreme’s network sustained a throughput of 3.5 GB for more than five hours, with spikes up to 5.2 GB and 4.8 GB during the pregame and halftime shows, respectively.

Extreme’s successful second year as the NFL’s Super Bowl network services provider has translated into positive results for shareholders.

In the last year, shares have gained a whopping 130%. That’s more than four times that gain of the Nasdaq in the same period.

And the price action is backed by solid fundamentals, too.

The company has generated earnings growth of 45% — well above the 4.7% industry average.

Over the last three years, Extreme Networks has averaged 21% revenue growth, nearly double the industry rate.

And despite the rapid growth, the stock still trades at just 1.1 times trailing sales — a 35% discount to the peer average.

Not bad for a company sporting a market cap of just $622 million.

So if you’re after “extreme” network tech profits, think small to earn big.

On the hunt,

Jonathan Rodriguez
Senior Analyst, Wall Street Daily

The post Super Bowl Shock: How This Small-Cap Stole the Show appeared first on Wall Street Daily.
By Jonathan Rodriguez

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