One Small Cap Stock Dominating a Multi Billion Dollar Industry

I recently recommended buying Gigamon (GIMO) heading into earnings. I had first recommended buying Gigamon in February and the stock has since shot up 35%. The stock rallied almost 10% after the company delivered a stellar earnings report last week.

The company reported earnings per share of $0.22, $0.04 greater than the consensus estimate of $0.18. Revenue for the quarter came in at $67.2 million as compared to the analyst estimate of $62.11 million. The company comfortably beat the analysts' estimates on both fronts and also provided strong guidance, thereby leading to a breakout.

Gigamon reported that the demand for the company’s security products carries on to speed up.
In the first quarter, the victories in the security segment jumped more than 60 percent of the company’s transaction, a surge of 20 percent as compared to the same period last year.

With the escalating figure of threats and breaches that swivel within the Information Technology sector, the company has planned some advanced upgrades for its GigaSECURE platform that will not only avoid threats but also detect them efficiently. The company also believes that the cyber security industry is at its infant stage, and has a protracted runway in the future. Moreover, without Gigamon’s GigaSECURE platform, the security solutions currently available will not be able to protect the firms from the upcoming challenges.

Apart from this, Gigamon has grasped a leading position in the market mainly due to its fully integrated, high-performance, and most extensible visibility solution in the market. Recently, Gigamon proclaimed new 100Gb product proposing and software updates that will additionally prolong the power of the company’s prominent market visibility solutions for 4G/5G LTE mobile operator organization and high-performance enterprise networks.

The company is about to launch some exclusive product that will definitely boost its sales including the GigaPORT-C06X24, the GigaPORT-C02, the GigaVUE-TA 100, and the G-TAP M Series.  All of these products are designed for the visibility fabric node.

As the scale of service provider substructure and the count of subscribers continue to escalate, the company should continue to gain more traction. The stock has already having gone up 35% since my initial recommendation, but I think more upside in imminent in the long term. Although Gigamon’s valuation is now too rich, the company’s strong growth justifies the valuation and the stock is still a buy in my opinion.
Published on May 4, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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