During the March 9 bottom of our seeming financial armageddon, this stock traded for $5.69. It ran up to $10.53, before coming back down to its present price of $7.40. While I am no telecom expert, the upcoming stimulus and data shortages(thanks Iphone & company) made this one even more intriguing.

The Pitch

From my limited understanding, it looks like Infinera is a best of breed low cost operator in optical communications networks that also possesses unique technological advantages. I’ll concede that Huawei (a Chinese private company) might beat them on price, but I wonder what corners they cut in doing so. From its business model, it seems that Infinera sells low margin units first followed by higher margin goods as its customers upgrade and expand. Additionally, they keep up a steady pace of new client orders including NTT, which is the largest telecom operator in Asia and second largest in the world in terms of revenue. INFN is also a busted IPO, meaning when it started trading in the market in 2007 it fell from its $25 starting price, which probably means some people still have negative sentiment towards Infinera.

The Bottom Line

Roughly 37% or so of its market capitalization is made up of CASH. With the stock currently marked underperform by many analysts, now would be a great time to jump on before the big boys and let them drive the price up for us. Though Infinera hasn’t turned a profit since the 2nd quarter of 2008, I suspect that will change soon and the share price will follow.

Disclosure: I am long INFN @ $7.36. I am not a financial advisor and the above is solely my opinion, NOT advice. Do your own research and contact a financial professional for help if necessary. My opinions do not take into account your specific situations or needs.

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