I love data.
But we wouldn’t have access to billions of terabytes of data without major advances in fiber optics technology. It’s the backbone for the future of 5G networks.
Copper cables were used to transport data from one place to another until fiber optic cables came along in the 1990s. Fiber optics, which uses the speed of light to transport data, was a gamechanger because it resists interference from power lines and lightning.
It allows data to move quickly over great distances, which is huge for the 5G future.
Think about your cable television. Remember only having three channels to choose from?
Thanks to fiber optics, you can access thousands of channels from around the world now.
Fiber optics isn’t a new concept, but it is a key player in the growth of technology like 5G. And that means there are great opportunities to invest in that growth now.
The Fiber Optic Market
In 2014, the fiber optic market was valued at $947.3 million dollars.
However, the introduction of 5G data speeds will blow that market valuation out of the water.
Fiber Optic Market to Grow 31% from 2019 to 2025
As you can see from the chart above, the market value has steadily increased.
It’s on pace to reach $1.6 billion by 2025 — a 78% jump from 2014.
That’s because fiber optic cables are used to transmit data for 5G technology, automobiles and industrial facilities.
It’s safer, faster and more reliable.
Companies in the fiber optic space will keep growing.
Using Adam O’Dell’s six-factor Green Zone Ratings system, I found a company at the heart of the fiber optic industry.
This stock actually showed up on Adam’s Weekly Watchlist recently, which you can access for free here. Every week, the hotlist highlights 10 new stocks that have the potential to crush the market over the next two to three months. Click here for free access now.
Luna Innovations Inc. Is Ahead of the Market
To make sure fiber optic cables are performing at their maximum, companies have to test those cables before, during and after installation.
Luna Innovations Inc. (Nasdaq: LUNA) develops and tests fiber optic sensing, testing and measurement products.
Luna works with companies like Lockheed Martin, providing equipment to test optical performance of the F-35 Lightning fighter jet.
It also works with electric battery producers to test the health and safety of batteries that go into electric vehicles, like Tesla.
Luna Innovation’s Fundamental Story is Strong
After a lackluster 2018 where its total revenue fell 21%, Luna Innovations has rebounded nicely.
From 2019 on, its total revenue has grown steadily.
Luna’s Total Revenue Expected to Jump 200% from 2019 to 2023
The company is also expecting a gross profit margin at or above 50% from now through 2023.
Its earnings per share increased 350% from 2018 to 2019 to $0.16.
That is expected to grow to $0.31 per share by 2022.
LUNA’s Tale of the Tape
After trading sideways from May 2020 to November 2020, the company’s stock price started to take off in November.
LUNA’s rise came after CEO Scott Graeff called 2020 “a remarkable and unexpected year” during the company’s third-quarter earnings call.
The company expanded its gross margin by nearly 200 basis points and had an $800,000 year-over-year increase in operating income.
Luna’s stock price has jumped more than 81% since that earnings call.
Luna Stock Up 154% off March 2020 Lows
Peering into Adam O’Dell’s six-factor Green Zone Ratings system, Luna Innovations rate a 95 overall — meaning only 5% of all other companies score higher.
It scores in the green in four of the six metrics:
- Growth — LUNA earns a 99 on growth thanks to impressive sales growth now and projections for the future. Its sales have beaten Wall Street estimates in each of the last five quarters.
- Size — The company is small with a $372.9 million market cap, earning it a 91 on size.
- Momentum — LUNA rates an 87 on momentum, telling us it has a strong uptrend with little volatility (it rates a 44 on volatility).
- Quality — Luna’s returns on investment, assets and equity are all better than the industry average. Its debt-to-equity is also very low (0.12). That earns it an 85 on quality.
Bottom Line:
Fiber optic data transfer isn’t going away anytime soon … it’s only getting better. That’s a boon for LUNA stock, which will outperform the broader market by at least three times over the next 12 months.
To realize those gains, you need to get into LUNA now.
Safe trading,
Matt Clark
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.