Daily Stock Pick: March 15th, 2022

Stocks were flat to start the day after another losing day on Wall Street.  The S&P 500 and the Nasdaq logged their seventh negative session of eight, falling 0.7% and 2.04%, respectively yesterday, while the Dow finished the day with a meager 1 point gain.  

“Investor sentiment is as bad as it gets. People have their positions, and they’re reluctant to sell out altogether because they’re hoping there’ll be a pretty massive snapback rally,” said Tom Martin, senior portfolio manager at Globalt Investments.

“The highs have been lower than the previous highs, and the amount of breadth has just not been enough to carry the day,” he added. “People are looking for an intermediate bottom to get some sort of rally on.”

Today we’re featuring a company positioned to benefit significantly from the more than $150 billion in broadband spending slated for the next three years. The pros on Wall Street see this stock stacking on an impressive 45% this year.  Considering the current entry, investors looking to get in on this unique communication services mid-cap might consider now an opportune time to strike up a position. 

Communication service cloud and software provider Calix Inc (CALX) seems likely to benefit significantly from the over $150 billion in broadband stimulus spending over the next three years.  Calix customers include SCTelcom, Verizon, ALLO Communications, CityFibre, Nex-Tech, Gibson Connect, ITS Fiber, Canadian Fiber Optics, Sogetel, and over 1,400 other communications service providers globally, the majority being in North America.

The company has continued to show strength despite persisting supply chain disruptions and even increased inventory in the fourth quarter to improve responsiveness to its growing customer base.  CALX is an asset-light business that outsources much of its manufacturing and warehousing to third parties.  This strategy has allowed the company to stay nimble amidst supply snags and rising prices without passing added costs to its customers.  

Calix’s customer retention was off the chart in 2021, which translates to more predictable income.  In 2021 recurring revenue increased 76% year-over-year to $125 million.  That number is up from a 23% YOY increase in 2021.  Thanks to the company’s subscription-based business model, competitive pricing, and customer satisfaction, that trend seems likely to continue over the next three years at least.  

The company sees revenue increasing about 9% YOY in the first quarter of 2022, well in line with its target range of 5 to 10% for annual revenue growth.   Compared to the year-ago quarter, cash and investments increased by $70.5 million primarily due to positive free cash flow of $46.3 million – yet another trend the company expects to continue in the coming years.  

CALX garners a Buy rating from the 8 analysts covering the stock and a median price target of $59.50, representing a 45% increase from where the stock closed Monday. 

Where to invest $1,000 right now...

Before you consider buying Calix, you'll want to see this.

Investing legend, Keith Kohl just revealed his #1 stock for 2022...

And it's not Calix.

Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.

Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.

Find that to be extraordinary?

Click here to watch his presentation, and decide for yourself...

But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.

Click here to find out the name and ticker of Keith's #1 pick...