PC Tel Inc: Overlooked 5G Penny Stock Up 83% in 2019, Remains Bullish


PC Tel Inc Has Great Momentum Heading Into Earnings Season

PC Tel Inc (NASDAQ:PCTI) is an overlooked 5G stock that has been on the rise in 2019. PC Tel stock hit a new 52-week high of $8.83 on October 4, for a year-to-date gain of 113.3%.

Since then, PCTI stock has given up some well-deserved, short-term ground to profit-taking. Trading at $7.70 per share at the time of this writing, the stock is still up more than 80% year-to-date.

Despite the slight pullback, PC Tel stock remains bullish. In August, the company reported strong second-quarter financial results, which were fueled in part by increased 5G scanning receiver demand and Industrial Internet of Things (IIoT) project wins.

Now all eyes will be on PC Tel Inc in the lead-up to its third-quarter results, which will be released after the markets close on November 7.

PC Tel Inc Overview

It’s all in the name, which stands for Performance Critical TELecom.

PC Tel provides testing and measurement tools to improve the performance of wireless networks. It focuses on Long-Term Evolution (LTE), public safety, and 5G technologies. (Source: “About PCTEL,” PC Tel Inc, last accessed October 23, 2019.)

The company designs and manufactures antennas used mainly in fleet management, small cells, transit systems. and Wi-Fi access points. PC Tel’s antennas are also used in various types of equipment for the IIoT.

On top of that, the company provides wireless product development, including designing, testing, and manufacturing.

Most of the company’s customers are located in Asia-Pacific, Europe, Middle East, Africa, and the Americas.

PCTI Stock Information

Market Cap $142.6 Million
52-Week Change 65.9%
52-Week High $8.83
52-Week Low $3.88
Shares Outstanding 18.49 Million
Float 13.46 Million
50-Day Moving Average $7.77
200-Day Moving Average $5.77

(Source: “PCTel, Inc. (PCTI),” Yahoo! Finance, last accessed October 15, 2019.)

PC Tel stock didn’t enjoy the January effect as much as many other tech stocks did. In fact, PCTI stock frustrated investors, trading in a fairly tight range for the first eight months of the year.

All that changed in early August though, after the company announced strong second-quarter results and an encouraging outlook.

PC Tel stock got an additional boost in August and September on the heels of investor confidence after the company made presentations at three investor conferences.

Chart courtesy of StockCharts.com

Strong Q2 Revenue Growth & Earnings Surprise

In early August, PC Tel Inc announced that its revenue for the second quarter ended June 30 increased nine percent year-over-year to $23.5 million. (Source: “PCTEL Reports $23.5 Million in Second Quarter Revenue,” PC Tel Inc, August 8, 2019.)

Revenue from the company’s test and measurement product line increased 82% while revenue from its antenna product line slid eight percent.

PC Tel reported a second-quarter net income of $0.05 per share, an improvement from the loss of $0.07 per share in the same period last year. Adjusted net income was $0.13 per share, compared to break-even in the second quarter of 2018.

PC Tel Inc continues to have a strong, enviable balance sheet, with $36.8 million in cash and short-term investments. Furthermore, the company remains debt-free.

“We are pleased with the sequential revenue and gross margin growth driven by 5G scanning receiver demand and significant Industrial IoT antenna project wins and facilitated by the cost reduction and realignment actions we took over the past year,” said David Neumann, CEO.

Analyst Take

PC Tel Inc is an excellent 5G penny stock that has seen its share price soar over the last three months.

The company recently implemented cost-cutting initiatives and streamlined its operations. The results of that are bearing fruit. Debt-free and flush with cash, PC Tel reported solid second-quarter revenue growth and a swing to profitability.

While the company is still in the early stages of 5G and the deployment of IIoT systems, management says PC Tel “has the capabilities and resources to grow with these markets and increase value for all stakeholders.”