Shares of Arris Enterprises (ARRS) jumped last week after Comcast (CMCSA) announced a bid to buy Time Warner Cable (TWC). That deal put Arris in the spotlight as its technology is likely to be a key component in the cable industry’s fight to keep customers from cutting the cable.
There is huge growth potential here and that’s why the stock deserves a premium valuation. Analysts expect Arris to grow profits by 32% in 2014. At current prices, shares trade for only 13.5 times 2014 estimated earnings. To the extent economic growth is better than expected this year, this stock could double in value from current prices.