Stocks to Buy Before They Join This Market Rally: Aerohive Networks (HIVE)
YTD Performance: -25%
Small-cap networking company Aerohive Networks Inc (NYSE:HIVE) has seen its stock near an all-time low in 2017, before a modest recent rally.
The networking space as a whole continues to be tough, and Aerohive admittedly has posted disappointing results in its key education vertical. Federal funds for Wi-Fi equipment in U.S. schools was supposed to be a major tailwind for sales of Aerohive access points — but the benefits haven’t quite materialized to the extent Aerohive expected.
That said, it’s not as if the news is all bad.
HIVE is coming off back-to-back years with double-digit revenue growth, including 10% in 2016. Non-GAAP net loss was halved last year. Net cash is about 20% of the company’s market capitalization, and Aerohive products still appear superior to controller-less products from rivals such as Cisco Systems, Inc. (NASDAQ:CSCO).
Aerohive has time to continue to execute its strategy — and could become an acquisition target in the meantime. Growth might have taken longer than expected, but Aerohive still is growing, and it seems likely that investors will remember that sooner than later.