Core Insights - The article emphasizes the importance of sales growth over traditional earnings metrics for evaluating stocks, especially in volatile market conditions [2][3][10] - A selection of stocks with strong sales growth and cash flow is recommended, including Universal Health Services, Methanex, Arista Networks, Voya Financial, and Maximus [2][10][12] Sales Growth as a Metric - Sales growth is preferred as it reflects actual demand for a company's products or services, providing better visibility into the durability of the business model [3][5] - Companies that can expand their sales during economic stress demonstrate pricing power and competitive advantages [3][5] Earnings Limitations - Earnings can be misleading due to one-off charges, cost-cutting, and accounting adjustments, making them less reliable indicators of a company's trajectory [4] Cash Flow and Financial Flexibility - Sustained sales growth leads to stronger cash flows, allowing companies to reinvest in innovation, expand markets, or return capital to shareholders without excessive debt reliance [5] Stock Selection Criteria - Stocks are shortlisted based on criteria such as 5-Year Historical Sales Growth greater than industry average and Cash Flow exceeding $500 million [6] - Additional metrics include P/S Ratio, % Change in Sales Estimate Revisions, Operating Margin, Return on Equity, and Zacks Rank [7][8][9] Recommended Stocks - Universal Health Services (UHS) is expected to have a sales growth rate of 8.5% in 2025 and holds a Zacks Rank of 2 [11][12] - Methanex (MEOH) anticipates a sales growth rate of 5.6% in 2025 with a Zacks Rank of 1 [12] - Arista Networks (ANET) is projected to achieve a sales growth of 25.4% in 2025 and has a Zacks Rank of 2 [13] - Voya Financial (VOYA) expects a sales growth of 16.1% in 2025, also holding a Zacks Rank of 2 [14] - Maximus (MMS) forecasts a sales growth of 2.7% in fiscal 2025 and has a Zacks Rank of 1 [15]

Core Insights - Actelis Networks has secured a new order valued at approximately $100,000 from a major city in Germany to modernize urban infrastructure networking capabilities [1][3] - The project involves Layer 2 encryption technology to provide seamless broadband connectivity to hundreds of urban infrastructure customer premises equipment sites [2][4] - This order highlights Actelis' growing momentum in the European smart city market, following successful deployments in Germany, Italy, and the Nordic region [3][5] Company Overview - Actelis Networks is a market leader in hybrid fiber-copper, cyber-hardened networking solutions for rapid deployment in wide-area IoT applications [6] - The company's solutions enable municipalities to achieve fiber-grade performance while leveraging existing copper infrastructure, significantly reducing deployment time and costs [4][6] - Actelis' "Cyber Aware Networking" initiative provides AI-based cyber monitoring and protection for all edge devices, enhancing network security and resilience [6]

TRENDING: This Industry Is Flashing Gargantuan Market-Size Estimates Arista Networks (ANET) hit an all-time high of 156.32 on Sept. 11 amid its analyst day before dropping 9% the following day. Shares of Arista are rebounding from their 21-day moving average now and heading for a weekly gain of more than 5%. Shares in the maker of networking and artificial intelligence gear gapped up 17% on Aug. 6, after… Related news These 7 Stocks Are Analyst Favorites For Magnificent Earnings Growth; Celestica Leads Indu ...

Core Insights - Lumen Technologies Inc. has launched Wavelength RapidRoutes, offering 100G and 400G wavelength services to enhance enterprise connectivity speed, particularly for AI and cloud network demands [1][3] - The company aims to eliminate long provisioning times, providing a 20-day Service Level Agreement for the new service [2] - Lumen plans to expand its intercity fiber network to over 47 million miles by the end of 2028 and increase its 400G-enabled footprint to 100,000 wavelength route miles, adding significant capacity across multiple metro markets [3] Company Overview - Lumen Technologies Inc. is a networking company that provides integrated products and services to both business and mass customers in the US and internationally [4]

Group 1 - Cisco Systems, Inc. (NASDAQ:CSCO) is perceived as lacking the growth potential seen in companies like Oracle, which may impact its future performance [1] - The company is held in a charitable trust for its steady yield and good management, despite not delivering significant growth [1] - Cisco provides a range of solutions including networking, security, collaboration, and cloud services, facilitating secure connectivity and digital transformation [2] Group 2 - There is a belief that certain AI stocks may offer greater upside potential compared to Cisco, indicating a competitive landscape in the tech sector [3]

Core Thesis - Artificial intelligence (AI) is a long-term investment theme, with significant interest in both AI-related stocks and the infrastructure supporting AI development [1] AI Infrastructure Overview - AI infrastructure can be compared to the human body, where semiconductors act as the heart, providing essential processing power for data centers [2] - The demand for data centers is expected to grow due to substantial capital expenditures from major hyperscalers [3] Company Summaries Super Micro Computer (SMCI) - Super Micro Computer provides customizable servers and racks essential for AI, integrating semiconductor chips from companies like NVIDIA [4] - The company is positioned to benefit from increasing demand for GPUs, with a stock price increase of approximately 48% in 2025, although it has faced resistance around the $60 level [5][6] Arista Networks (ANET) - Arista Networks serves as the nervous system of AI infrastructure, providing high-speed networking solutions for AI clusters [7] - The company is a leader in the data center switching market, with significant commitments from major clients like Microsoft and Meta [8] - ANET stock has risen 27.8% in 2025, with a notable increase of over 57.5% in the last three months, and has a price target suggesting an 11% upside [9] Broadcom (AVGO) - Broadcom plays a critical role in AI acceleration by supplying application-specific integrated circuit chips (ASICs) and networking chips [11] - The company has partnerships with major AI hyperscalers, which may reduce their reliance on NVIDIA [12] - AVGO stock has increased about 51% in 2025, with analysts projecting a price target above the current consensus, indicating strong bullish sentiment [12][13]

Core Viewpoint - Arista Networks Inc is highlighted as a key AI stock to monitor, with a price target increase to $140.00 while maintaining a Neutral rating following a successful Analyst Day presentation [1]. Group 1: Company Performance and Guidance - Arista's differentiation is shifting from operating systems to cloud integration, telemetry, automation, network diagnostics, and power savings strategies as AI data centers emerge [2]. - The company provided 2026 operating margin guidance of 43% to 45%, which is lower than the 2024A and 2025E estimates above 47% [2]. - Revenue CAGR for 2026-2029 is projected in the mid-teens, contrasting with a 25% sales growth forecast for 2025 and 20% for 2026 [2]. - Management anticipates that approximately 25% of its business, particularly in AI Data Center and Campus, will grow by around 70%, while the remaining 75% of sales are expected to remain flat [2]. - Gross margins are expected to decline from 63%-64% in 2025 to 62%-64% in 2026, and further to 60%-64% post-2026 due to pricing pressures from major cloud customers [2]. - Operating expenses are projected to grow significantly faster than sales in 2026, with a similar trend expected in 2027 [2]. Group 2: Financial Projections - Revenue estimates for 2025 have been increased to $10.5 billion from $10.1 billion, while the EPS forecast remains around $3.10 [2]. - New revenue and EPS projections for 2027 are set at $12.2 billion and $3.50, respectively [2]. - The updated price target of $140 is based on a 40x multiple of the 2027 EPS [2].

Market Overview - The broader equity markets have reached all-time highs, driven by optimism regarding a potential interest rate cut by the Federal Reserve despite concerns about the economy and a slowdown in the labor market [1] - The consumer price index increased by 0.4% for the month, surpassing expectations of a 0.3% rise, while only 22,000 jobs were added in August, indicating soft labor market conditions [1] Investment Strategy - Investors are adopting a wait-and-see approach regarding the central bank's monetary policy and its outlook on economic growth and inflation, which may influence future rate cuts [2] - Identifying "cash cow" stocks with high returns is essential, but it must be supported by attractive efficiency ratios like return on equity (ROE) [2][3] Importance of ROE - ROE, calculated as Net Income divided by Shareholders' Equity, helps investors differentiate between profit-generating companies and those that are not, indicating financial health [3] - A higher ROE signifies effective management in generating profits without new equity capital, thus rewarding shareholders with attractive risk-adjusted returns [4] Stock Screening Parameters - Stocks were shortlisted based on criteria including Cash Flow greater than $1 billion and ROE exceeding the industry average [5] - Additional metrics include Price/Cash Flow lower than the industry average, Return on Assets (ROA) greater than the industry average, and 5-Year EPS Historical Growth exceeding the industry average [6][7] Featured Stocks - **Arista Networks Inc. (ANET)**: Engaged in cloud networking solutions with a long-term earnings growth expectation of 18.7% and a trailing four-quarter earnings surprise of 12.8%, holding a Zacks Rank 1 [8][9] - **TE Connectivity plc (TEL)**: A global technology company with a long-term earnings growth expectation of 9.8% and a trailing four-quarter earnings surprise of 4.9%, holding a Zacks Rank 2 [10][11] - **Corning Incorporated (GLW)**: Focused on glass technologies with a long-term earnings growth expectation of 18.2% and a trailing four-quarter earnings surprise of 4.7%, also holding a Zacks Rank 2 [12] - **Banco Bilbao Vizcaya Argentaria, S.A. (BBVA)**: Provides banking services with a long-term earnings growth expectation of 10% and a trailing four-quarter earnings surprise of 7.4%, holding a Zacks Rank 2 [13] - **AppLovin Corporation (APP)**: Offers software solutions for advertisers with a long-term earnings growth expectation of 20% and a trailing four-quarter earnings surprise of 22.4%, holding a Zacks Rank 1 [14]

Core Insights - Arista Networks Inc (NYSE:ANET) is gaining attention as a trending AI stock, with Goldman Sachs raising its price target to $175.00 from $155.00 while maintaining a Buy rating following the company's analyst day on September 11 [1][2] Financial Outlook - The company introduced a new long-term financial model projecting 20% revenue growth for 2026 and a mid-teens CAGR from 2026 to 2029, indicating strong future performance expectations [2][3] - Despite the EBIT margin outlook for 2026E and 2029E being below consensus, this conservatism reflects the company's historical approach, with expectations of operating leverage from strong topline growth [3] Market Position and Strategic Initiatives - Arista is positioned as a best-of-breed networking vendor, supported by its proprietary EOS software, which enhances network performance, efficiency, and reliability [2][3] - Key strategic initiatives discussed include investments in campus portfolio, go-to-market strategies, and data center initiatives such as bluebox and scale-up Ethernet [3] AI Infrastructure and Customer Engagement - The company is expected to benefit from increased AI infrastructure spending, driven by the growing adoption of Ethernet in scale-out backend by hyperscalers and AI clouds, as well as the emerging use of Ethernet in scale-up starting in 2027 [3] - Customer testimonials from notable companies like OpenAI, Anthropic, and AMD, along with the willingness to offer bluebox solutions, further demonstrate Arista's strong competitive position in the AI ecosystem [3]

Group 1 - Needham raised its price target on Arista Networks to $160 from $155 while maintaining a Buy rating [1] - Arista's Analyst Day showcased a compelling long-term vision with new AI and cloud-focused initiatives targeting white-box providers and Nvidia [1] - Recent senior management hires were praised for their potential to accelerate change and expansion within the company [1] Group 2 - Proprietary checks indicated that Arista became a major supplier to Anthropic in 2025, with revenue contributions expected in 2026 [2] - These developments reinforced confidence in Arista's ability to sustain growth and expand its market presence [2]