Arista Networks Inc (NYSE:ANET) stock is up 96% so far in 2017. There’s no doubt this is a big move in ANET stock.
Its most significant competitor is more than 10x its size (by market cap), but Arista Networks continues to show analysts and investors that it’s the cloud networking firm that can do it.
Think back to the big dotcom bubble. The internet was the new hot thing and networking companies like Cisco Systems, Inc. (NASDAQ:CSCO) and Juniper Networks, Inc. (NYSE:JNPR) were trading in the stratosphere and doing all-stock acquisitions as their prices and businesses soared.
Networking was the future, driven by the build-out of the internet and faster switching technology.
ANET Stock: Part of the Next Big Thing
What that networking revolution was to the 1990s, cloud computing is to the current market.
The big players like Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) have been in the game for a long time. But most of their initial uses were internal. It hasn’t been until relatively recently that they saw the opportunity to open up their systems for broader use.
And now that the cloud is coming of age, it has opened up huge opportunities in data storage, Big Data, Internet of Things, mobile and any manner of functions where users need to be untethered from a dedicated machine.
The one thing that makes ANET stock so compelling is that it has come of age at exactly the right time. Big network companies like CSCO are now playing catch up to it.
The CSCO’s of the world were late to jump on the cloud move, and now they’re scrambling for business, since focused cloud firms like Arista Networks are getting more and more orders, or in other words, stealing more market share from the legacy network providers.
In its last reported Q2 results in early September, ANET stock saw revenue grow 51% compared to the same quarter last year — that beat analysts’ estimates by more than 10%. And adjusted earnings growth was up 81%.
Bottom Line on Arista Networks
This kind of growth is no longer surprising. And the fact that Arista Networks is up nearly 100% year-to-date and the stock is still trading at a price-to-earnings ratio of 48 after an 81% moving in earnings means it’s not even overvalued yet.
What’s more, since it’s not even a server company — it makes switches for the cloud and other automation and systems devices — it gets deals even when the legacy server companies are getting some too.
ANET stock is in a big growth trend right now and in the center of the hottest tech infrastructure shifts in decades. It may not be the ground floor, but Arista Networks is closer in that it is the penthouse right now.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
