What: Shares of telecom-grade networking equipment builder Ciena Corporation (NYSE:CIEN) surged 13% higher in May, according to S&P Capital IQ data. Share prices didn't suddenly soar on any particular piece of May news, but rose steadily throughout the month. Ciena's stock closed higher on 14 of May's 18 trading days.
So what: If Ciena had any big news to share in May, it would be when the company announced the $400 million acquisition of software-defined networking expert Cyan (NYSE:CYNI) in early May. But the market yawned that event off, and Ciena's strong month rested on a general surge in the long-distance networking industry. Driven by a batch of big-ticket mergers and acquisitions across the telecom and equipment spaces, investors are looking for upside where the two markets meet.
Now what: Ciena followed up on a fine May with a strong earnings surprise in early June, and shares have gained another 6.1% this month. All told, Ciena shares have soared 31% higher in 2015, roughly in line with industry neighbors Palo Alto Networks and Juniper Networks. These companies are executing crisply at a time of abundant market opportunity, thanks to merger mania and a rising need for very fast long-haul network links.
Ciena is also enjoying some of the strongest free cash flows in the company's history, giving management a wider range of operating options and a stronger financial platform. Management deserves a golf clap for what they have done this spring, and I see no short-term roadblocks that would end this slow, smooth surge.