Stocks that Doubled in 2016: Dycom

Investment Analysis Clubs Saul’s Investing Discussions
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Here’s a little blurb on Dycom from Fox Business:

Dycom is a $3 billion enterprise that’s found itself in the sweetest of sweet spots: providing contracting services to help increase the bandwidth for some of the nation’s largest telecommunication companies.

As voice, data, and video streaming takes up more and more of the Internet’s capacity, telecom giants like AT&T, CenturyLink, Comcast, and Verizonhave contracted out the buildup of their respective infrastructures to Dycom. Specifically, its deployment of fiber technologies has been in high demand: Revenue has increased 20%, while earnings have jumped 153% over the past year.

Investors should be cautious, though: The four telecom giants mentioned above account for 56% of Dycom’s revenue. If any one of these companies finds a cheaper and equally effective alternative, shares could plunge in short order.

Read more at http://www.foxbusiness.com/investing/2015/12/24/companies-th…

  • Matt
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Investors should be cautious, though: The four telecom giants mentioned above account for 56% of Dycom’s revenue. If any one of these companies finds a cheaper and equally effective alternative, shares could plunge in short order.

I think that is a small worry. It’s not like you can switch to a cheaper chip maker, you have to have labor and machinery and expertise all over the country. And to that end, Dycom has been acquisitive - and seems to be doing it well. Read the following thread on SWKS and how much the IoT is going to cause bandwidth growth. Carriers need that bandwidth and they are trying to catch up to to Verizon FIOS. Google Fiber is starting to deploy. Data centers need high capacity fiber (see INFN) for all the data going to the cloud (like Ambarella police camera footage).

So, that is not a worry for me.

Pete (Long DY)

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