A few "educated" bets

I did something a little different during this earnings season. I made a few educated “bets” on other companies after seeing how well Infinera has performed. So far, one “bet” is tracking to pay off in tomorrow’s session. I’ll find out soon about the other two.

To clarify, I stumbled across an article a couple of days ago during one of my routine searches for Infinera news:


We expect Windstream Holdings, Inc. (WIN - Analyst Report) to beat expectations when it reports third-quarter 2015 financial numbers on Nov 5, before the opening bell.

Last quarter, Windstream recorded a 21.31% positive earnings surprise. Moreover, the company’s earnings have outpaced the Zacks Consensus Estimate in two of the last four quarters, with an average beat of 65.75%.

What is Driving the Better-than-Expected Earnings?

Notably, Windstream is currently focusing on optimizing its last mile network and cutting costs. For 2015, the company has selected five markets where it intends to create a meshed network around its existing network rings to provide last mile access. Management has decided to spend $25 million initially to increase its on-net fiber buildings in these markets. We expect the company’s latest initiative to bring in considerable savings.

Also, Windstream is gradually expanding its wave transport services with 100 Gbps data transmission speeds in the U.S. The company is using Infinera Corp.’s (INFN - Snapshot Report) DTN-X platform to expand its network and meet growing demand for large data transmissions.

Stocks to Consider

Windstream is not the only company looking up this earnings season. Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Facebook, Inc. (FB - Analyst Report) has an earnings ESP of +5.71% and a Zacks Rank #1.

CenturyLink, Inc. (CTL - Analyst Report) has an earnings ESP of +1.45% and a Zacks Rank #2.

If you follow Infinera you’ll recognize all three of the stocks mentioned as customers. They all rely on DTN-X for their long-haul support. A bit uncanny seeing them all there.

So what did I do? I put down a few starter positions on all three. 0.5% for WIN and CTL and 4% for FB.

FB and CTL reported tonight. Both beat their EPS estimates. CTL does not have as much trading in after hours, but it is up. FB is up almost 4%. WIN reports tomorrow morning.

The logic I’m following here is if Infinera is that much of a disruptor and game changer, use of their products should yield a positive revenue impact for their customers (provided their executing on their business well). I guess I’m putting my money where their mouth is. Wish me luck.



Wish you luck, Kevin.

I like FB, haven’t been able to pull trigger because many great names with more attractive valuation are around… E.g. Amazon, Google, Bidu… All of which I have been adding lately. Also adding EEFT, PLAY…

(Over last four months, i have been reducing my overweight position on BOFI, SWKS and SKX… Some of them I was to able to sell before the great drop in August / October… And sold some more after the drop…)

I guess WIN and CTL have potential but I haven’t researched enough to know.

Have you looked at 1YPEG of any of your suggestions? I will try and post 1yr PEG on the names I suggested above.

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