This Penny Stock Is Breaking Out!

| October 24, 2011 | 0 Comments

It’s a well known fact by now consumers everywhere love mobile broadband devices.  Smartphones, tablet computers, and netbooks are taking the world by storm.

But what most people don’t realize is consumers aren’t limiting themselves to just one kind of device.

More and more consumers today own multiple mobile broadband devices. They’re not replacing one device with another.  Instead, they’re adding to their stable of devices.

For example, it’s not uncommon for a consumer who owns a smartphone to go out and buy the latest and greatest tablet computer.  And in many cases, this same consumer will also own a netbook computer.

It’s a trend that’s only just now starting to take off.

While this is great news for device makers, it’s creating a headache for mobile telecom service providers.

Right now, the vast majority of service providers only offer separate data plans for each mobile device.  In other words, you have to have one data plan for your smartphone, another for your tablet computer, and a third plan for your netbook.

This pricing model makes it very expensive for the average person to have broadband service for more than one device.

And what about families?

Currently, you have to pay for a separate data plan for each family member.  For a family of four, this amounts to a huge monthly mobile device bill.

I’m personally coming to grips with this problem in my own family.

My 14-year old daughter just told me she wants an iPhone when her plan comes up for renewal in January.  The problem is I’ll have to fork over another $30 a month (in addition to the $30 I’m paying for my own smartphone) for broadband services.

Call me old school, but I’m having a tough time accepting the idea of paying nearly $500 a year so my 14-year old daughter can surf the web anytime she feels like it.

There’s got to be a more affordable solution!

And as a matter of fact, there is…

It’s called a “shared data plan”.

This type of plan would allow the customer to pay for a specific amount of data to be shared among multiple devices or family members.  Such a plan would make it so users only pay for the amount of data they use.

And it would pave the way for even more individuals and families to add additional mobile broadband devices to their accounts.

Shared data is the wave of the future for mobile broadband service providers.  According to Infonetics Research, the number of active devices on shared data plans will skyrocket from a few million today to over 250 million devices by 2015.

This means service providers must upgrade their networks now to prepare for the coming onslaught.  Existing network structures were not designed to support shared data plans.  Customers will need greater visibility of data usage by plan members and controls to limit usage.

For example, if I’m sharing data with my teenage daughter, I may want the ability to limit the amount of data she’s able to use.  If I don’t, I’ll probably find she’s used up our monthly allotment in the first few days of the month!

No question about it…

Service providers need more sophisticated capabilities to manage shared data plans.  They need the ability to track usage in real time, issue alerts as users approach the monthly data cap, differentiate among users of the plan, and maybe even impose different usage allocations or restrictions.

How will they do it?

A good number of service providers will turn to a certain small-cap company for help.  Introducing, Tekelec (TKLC).

This $654 million company is quickly emerging as a market leader in the fast-growing mobile networking industry.  They provide mobile broadband solutions to both manage and monetize the explosive growth in mobile data traffic and multimedia applications.

Tekelec’s solutions are powered by a unique Network Intelligence layer that analyzes a subscriber’s quality of service and sets policies to improve their experience.  It also provides service providers with the real time information they need to dynamically make adjustments to networks and devices.

It’s a soup to nuts solution for service providers to quickly and cost-effectively upgrade their networks for the shared data plan revolution.

And even though this trend is still in its infancy, TKLC is profiting heavily from it.  Just last week the company preannounced better than expected third quarter revenue and earnings.  And management said they’ll probably raise guidance for the year when they officially report earnings on November 9th.

As you might imagine, the stock is already moving higher.

You can plainly see the stock recently broke out of a three month long downtrend.  Over the past week, TKLC has surged 36% on much heavier than normal volume.  Investors are clearly snapping up shares in anticipation of stronger growth going forward.

And this is just the beginning…

With expectations for explosive growth in shared data plan offerings, TKLC is poised for much higher revenue and earnings growth over the next five years.  If you’re looking for an exciting small-cap stock with huge upside potential, you may want to take a closer look at TKLC.

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Category: Penny Stocks

About the Author ()

Robert Morris is the editor of Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market’s next Blue Chips. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics. In addition to Penny Stock Research, Robert also writes frequently for two other free financial e-letters, ETF Trading Research and the Dynamic Wealth Report. He’s also the editor of two highly successful and popular investment advisories, Biotech SuperTrader and China Stock Insider.

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