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At it's current price UBNT offers high growth potential at a reasonable price.

Price Target: $65 per share.

Catalyst: Increased global demand for wireless high speed Internet.

While internet access may seem like a standard part of modern life in the US, the digital divide is still a major concern across emerging and frontier markets across the globe. These countries often have fiber optic infrastructure required for broadband limited to major cities and tourist destinations, leaving those in more remote areas or in second tier cities lagging behind. The way to profit from investing in the growth of internet penetration is through leading the leading wireless internet service provider: Ubiquiti Networks (NASDAQ:UBNT).

They manufacture a lineup of wireless devices that allow high speed broadband delivery to remote areas in developed markets, but primarily in underserved developing nations (75% of revenues outside of US). Governments, households, and local businesses recognize the importance of Internet access to accelerate development and commerce, so the market demand is clear. Also, its wireless solutions are more cost effective than constructing cable lines and other infrastructure needed to extend broadband to these locations via the traditional network grid. Savings on average are 90% below competing land based broadband prices in selected regions.

In addition to serving a key need, Ubiquiti is run efficiently and displays high levels of profitability. CEO Robert Pera has an excellent track record. After working as a engineer for Apple, he built Ubiquiti from his apartment into a multibillion dollar company with no venture capital funding. Currently his management team has been able to deliver to investors by maintaining and increasing return on invested capital at a very strong output of 43.7%. The mix of hiring top talent and spending top money on core research while keeping other costs down to the bone has left Ubiquity very profitable. Ubiquity has also been able to outsource its entire manufacturing operations to Asian low cost factories, and its entire sales and marketing efforts to affiliate marketers. These drivers allow them to offer the product quality equal or better than Silicon Valley competitors, such as Cisco, while selling their product at a price equal to knock off Chinese companies with inferior technology. They also have the software and hardware fully integrated in a fashion to keep efficiency levels and switching costs for customers elevated. The result has been earning 30%+ net profit margins while maintaining growth of over 77% per year since 2009. Earnings growth is expected to remain above 20% until 2019 as well. With a current P/E of 23, the stock appears to be is on the expensive side, but when adjusted for growth the stock is cheap with a PEG ratio of 1.01.

Overall, the large demand for internet access in remote corners of the globe and a well run business operation, Ubiquiti is one of the best in their business. Because of these factors, UNBT is one of the fastest growing profitable companies in the world.

UBNT Long:

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*Bolded area is Our Base Case

*Italicized/Underline Area is Worst Case

*Used EPS for Model