LLNW Stock: The $3 Penny Stock Every Investor Should Own

Limelight Networks Stock
Credits: istock.com/arekmalang

Traffic Growth a Big Catalyst for Limelight Networks Stock

Today’s stock represents another of my favorite investing methods. It is called venture capital investing, which is investing in the stocks of companies that provide superior products or services within an entire range of industries.

Investing early in such growth companies could turn out to be a great way to reap triple-digit returns.

Case in point is Limelight Networks, Inc. (NASDAQ:LLNW). The company provides services to help its customers optimize and deliver digital content to a number of channels like the Web, mobile, social media, and gaming. The company is a leading player in digital content delivery all around the globe. Its services include content delivery, video content management, web sites, and web application acceleration.

Limelight Networks’ services are important to companies that view Internet, mobile, social media, and other digital initiatives as critical to their success. These customers include traditional and emerging media companies operating in the television, music, magazine, movie, game, and social media industries, as well as enterprises and government entities conducting business online.

The company’s offerings enable its customers to deliver high-quality online experiences across all platforms, and thereby improve brand awareness and drive revenue.

The content delivery network market is exciting, with robust growth expectations as organizations aim to deliver high-quality digital experiences.

As per a report by MarketsandMarkets Research Private Ltd., the global content delivery network (CDN) market is expected to grow from $6.05 billion in 2016 to over $23.0 billion by 2021, posting a compound annual growth rate (CAGR) of almost 31%. The CDN market is growing rapidly due to the increasing volume of data consumption over the Internet and the explosion of video and rich media content over social media sites. (Source: “Content Delivery Network (CDN) Market by Type (“Standard/Non-video and Video), Core Solution (Web Performance Optimization, Media Delivery, and Cloud Security), Adjacent Services, Service Providers, and Region – Global Forecast to 2021,” Markets and Markets, last accessed August 24, 2017.)

Limelight Networks has positioned itself well to benefit from these changes. Consumer demand for digital content will likely continue growing, due to trends like increasing online video viewership and growing digital downloads. Moreover, as mobile devices become the primary method for users to interact with online content, the company’s mobile-first focus bodes well for LLNW stock.

Limelight Networks has been posting impressive financial numbers lately. Last year, the company generated revenue of a little over $168.0 million and ended with more than $66.0 million in cash and marketable securities. It posted a margin of 42.4%, which was an increase of 250 basis points from 2015.

The company announced its second-quarter results last month, reporting revenue of $45.4 million, which is an increase of four percent year-over-year. Confident about its performance, Limelight has raised its 2017 guidance for revenue; gross margin; non-generally accepted accounting principles (GAAP) earnings per share (EPS); and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA).

LLNW stock has gone up by almost 44% year-to-date and about 82% over the past year. Optimism has increased as the past challenges seem to be settling down and the road to future growth is being cleared.

The following chart shows this impressive growth.

Limelight Network Nasdaq Stock

Chart courtesy of StockCharts.com

Although Limelight Networks stock is trading near its record highs and could face volatility in the coming days, the long-term trend appears to be favorable. As Internet traffic expands, investors could see triple-digit returns on their investments.

Analysts also estimate continuous growth in the revenue and earnings of the company in the coming years. (Source: “Limelight Networks, Inc. (LLNW),” Yahoo Finance, last accessed August 24, 2017.)

The company has plans to expand its presence globally in the second half of 2017, in regions like South America, the Middle East, and South Africa. These areas represent an important opportunity for increased growth. Limelight Networks continues to achieve more software innovation amid healthy customer demand.

Analyst Take:

Limelight Networks operates in an exciting and evolving industry. It has been improving its position as demand rises for reliable digital content delivery network services.

Limelight Networks has adopted a disciplined approach to achieve better performance. Not only this, the company is exploring the potential of new higher-margin revenue streams like data mining and analytics.  This means there is further room for Limelight Networks stock to grow and shine.

Investors could consider this venture capital stock for their growth portfolios. LLNW stock appears set for further gains if the company continues to successfully execute its strategy.