5-Star Stocks Poised to Pop: Harmonic

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, video services specialist Harmonic (Nasdaq: HLIT  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Harmonic's business and see what CAPS investors are saying about the stock right now.

Harmonic facts

Headquarters (Founded) Sunnyvale, Calif. (1988)
Market Cap $546.1 million
Industry Communications equipment
Trailing-12-Month Revenue $509.8 million
Management CEO Patrick Harshman (since 2006)
CFO Carolyn Aver (since 2010)
Return on Capital (Average, Past 3 Years) 2.1%
Cash/Debt $134.3 million / $0
Competitors Arris Group (Nasdaq: ARRS  )
Cisco Systems (Nasdaq: CSCO  )
Motorola Solutions (NYSE: MSI  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 95% of the 320 members who have rated Harmonic believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars FAOFool and fellow Fool Sean Williams (TMFUltraLong), both of whom are ranked in the top 10% of our community.

A few months ago, FAOFool nicely summed up the Harmonic bull case: "Solid financials and good play on technology demographics. Also, with increased competition, will become a buyout option for larger firms."

Over the next five years, in fact, Harmonic is expected to grow its bottom line at a solid rate of 15% annually. That's faster than rivals like Arris (10%), Cisco (10%), and Motorola Solutions (10.5%).

Last month, Sean expanded on the Harmonic outperform argument:

I remember the good old days when I was buying and selling this company a decade ago at nearly $100 per share ... oh how times have changed. What hasn't changed is Harmonic's trading range which seems to vary between the low $5's and the $8-$10 range. This is simply a case of playing the perpetual channel. The great thing is the company can back up its valuation. [Having traded] at 1.14 times book value, roughly 10 times forward earnings ... there's really no reason for sellers to keep holding down Harmonic here.

What do you think about Harmonic, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track Harmonic? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of and has created a bull call spread position on Cisco. Motley Fool newsletter services have recommended buying shares of Cisco. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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