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Corporate Tech and Telecom spending has not exactly been robust recently. Increasing concerns about the situation in Europe as well as slowing worldwide growth has put an increasingly cautious outlook on corporate IT budgets. However, one fast growing telecom provider is bucking the trend and picking up new orders and catalysts.

Recent catalysts for Procera Networks (NASDAQ:PKT):

  • It just received an important initial order for its 8920 PacketLogic product line from a large U.S. based carrier which is believed to be AT&T (NYSE:T) or Verizon (NYSE:VZ). FY2013's revenue growth was already predicted to be around 30% by analysts before this announcement.
  • Earlier in August, the company's earnings report easily beat estimates both on the top and bottom line. Sales came in about 10% above consensus at $14.7mm. This was up 52% Y/Y and earnings beat estimates by two cents and were up 300% Y/Y.
  • A director made the first insider purchase in 2012 late in August, buying more than $100k in new shares.
  • Stifel Nicolaus raised its price target to $30 from $27 on PKT after earnings.

Procera Networks provides intelligent policy enforcement solutions based on deep packet inspection technology that enable mobile and broadband network operators and entities to manage private networks. (Business description from Yahoo Finance)

4 additional reasons PKT is a solid growth play at under $22 a share:

  1. The company has over $130mm in net cash on its balance sheet (Approximately 30% of market capitalization)
  2. The company has beat earnings estimates for six straight quarters. The average beat over consensus over the last four quarters has averaged over 40%.
  3. Given the company's small market cap (Around $300mm after taking out cash), rapidly increasing sales and clients among the large telecom carriers; it would not surprise me if a large player acquired the company at some point in the future. Cisco (NASDAQ:CSCO) would seem to be solid fit given it is a serial acquirer and serves the same customer base.
  4. The median price target on the stock by the six analysts that cover the stock is $29 a share, some 30% above the current stock price.

Disclosure: I am long CSCO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Fast-Growing Telecom Provider Procera Networks Books New Orders, Picks Up Positive Catalysts