Inseego Corp: How This 5G Play Can Double Via Huawei Conflict

Inseego Corp How This 5G Play Can Double Under Trump
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Inseego Could Benefit From Trump-Huawei Battle

Unless you have been lounging on a desert island, off the grid, you are probably quite familiar with the U.S. administration’s current battle against Huawei Culture Co Ltd and its “5G” technologies.

There is a widely held belief that the United States is trailing the world in 5G technologies—the next battleground for innovation, and a critical area for the future of technology.

Simply put, 5G speeds are incredibly fast and will allow new technologies and applications to be developed. This is why there is so much fuss about Huawei.

With the U.S. administration set to block the sale of key hardware and software to Chinese tech companies like Huawei, the door will be open for domestic 5G players, including small-cap Inseego Corp (NASDAQ:INSG).

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Trading around 25% off its 52-week high of $6.00 in January, INSG stock is worth a look on any price weakness, given that the stock is up 123% over the past year.

My bull thesis toward Inseego stock is based on the company’s mobile technologies for high-growth areas such as the “Internet of Things” and 5G.

The below INSG stock chart shows the upside breakout from the previous accumulation channel to the record high in January, prior to the subsequent retrenchment to more attractive entry points.

Chart courtesy of StockCharts.com

Why INSG Stock May Be Primed for a Jump

A look at the revenue picture for Inseego Corp shows a company looking for a breakthrough in jump-starting its growth rate.

Revenues edged higher from 2014 to 2016 prior to easing off in 2017 and 2018, as the below table shows.

Fiscal Year Revenue (Millions)
2014 $185.2
2015 $220.9
2016 $243.6
2017 $219.3
2018 $202.5

(Source: “Inseego Corp. (INSG),” Yahoo! Finance, last accessed June 14, 2019.)

But things are looking a bit brighter over the next two reportable years.

Inseego is expected to ramp up its revenues by 11% to $224.7 million in 2019, followed by a 22.7% increase to $275.7 million in 2020. The high revenue estimate for 2020 is $312.7 million. (Source: Ibid.)

If the company can successfully develop 5G technologies, the upside estimates may prove to be conservative.

Inseego Corp is continuing to burn through cash, but its losses fell between 2016 and 2018. For 2019, Inseego is expected to narrow its loss to $0.02 per diluted share and it could even make a profit of $0.03 per diluted share.

The earnings growth is expected to accelerate, with Inseego earning $0.26 per diluted share—or as much as $0.33 per diluted share—in 2020. (Source: Ibid.)

Analyst Take

Based on its current $4.59 share price,  Inseego stock is trading at an attractive 13.6 times its high estimate for 2020.

For such as small company, Inseego Corp has decent institutional support, with 79 institutions owning around 79.2% of the outstanding shares. (Source: Ibid.)

So if you believe in the massive potential for 5G technologies, INSG stock may prove to be a major benefactor of the 5G war.