Michael A. Robinson
Three strikes and you’re out, right?
Not in my league – where we’ve got instant replay and it’s clear the umpire missed the call.
In this case we’ve got three “umpires” – and after checking the “tape” I’m convinced they all need new glasses.
Here’s what I’m talking about…
Between April 4 and 27 – after the end of the first quarter but before earnings were released – I watched as three brokers lowered their estimates on a company I’ve had my eye on for a while now.
It’s a maker of high-speed server switches and related networking software.
At the time, these umps were worried about two main things: continued growth and a patent battle with a networking rival. The “strike calls” came from Credit Suisse, Instinet, and Stifel.
Seeing a tech stock get three strike calls in three weeks like that would give most investors pause.
But we here know that sometimes you have to ignore the noise on Wall Street and dig deeper… check out the “instant replay”… and uncover whether there’s growth ahead or not.
So that’s what I did.
Turns out, this networking company had a superior earnings report. And according to my research deep dive, that patent dispute is a load of baloney.
Plus, I dug up five key reasons why this company’s stock has a whole lot of upside.
Let’s get into it…
Silicon Valley All-Star
Credit Suisse, Instinet, and Stifel glossed over one key fact about Arista Networks Inc. (NYSE: ANET).
It was founded by one of Silicon Valley’s top technologists of the past 35 years.
In 1982, Andy Bechtolsheim co-founded Sun Microsystems, a computing pioneer that invented the Java programming language and was later sold to Oracle Corp. (Nasdaq: ORCL) for $7.4 billion.
Bechtolsheim went on to be the first investor to fund Alphabet Inc. (Nasdaq: GOOGL).
Then, as a co-founder of Arista starting in 2004, he helped invent products and build a management team that has delivered 195% gains in just the past 19 months.
Now Arista finds itself enmeshed in a patent battle with Cisco Systems Inc. (Nasdaq: CSCO).
Yes, Bechtolsheim and a couple of his Arista senior execs logged stints at Cisco. But Arista was founded more than a dozen years ago, long before this fight was even a thought in anyone’s heads.
More to the point, Bechtolsheim is known as a great inventor – so the likelihood that he infringed on Cisco’s patent is close to zero.
Plus, Arista has taken market share from Cisco because its high-speed Ethernet switches are better. On top of that, Arista has invented new software for its switches known as extensible operating system (EOS).
Adding this software to its lineup is a savvy move because it makes Arista’s hardware even more efficient. It’s a breakout move that makes Arista even stronger in the cloud computing market – a sector IBM Corp. (NYSE: IBM) says will be worth $200 billion by 2020.
To show you why Arista stock has so much upside ahead, let’s run it through my five filters for finding the best tech stocks – before they take off…
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Michael A. Robinson
About the Author
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Michael A. Robinson is one of the top financial analysts working today. His book “Overdrawn: The Bailout of American Savings” was a prescient look at the anatomy of the nation’s S&L crisis, long before the word “bailout” became part of our daily lexicon. He’s a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies ones that have the power to sweep across the globe and change the very fabric of our lives and profit opportunities they give rise to. He also explores “what’s next” in the tech investing world at Strategic Tech Investor.
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