TipRanks Smart Growth Portfolio #38: Firing On All Fibers
Dear Investors,
Welcome to the 38th edition of the Smart Growth Portfolio and Newsletter.
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Portfolio News
❖ Micron (MU) experienced a volatile week with sharp spikes and falls. On the positive side were the surging Nvidia earnings, strengthening confidence in the AI trade and portending continued strong demand for MU’s DRAM, NAND, and other semiconductor memory and storage solutions. Also supporting the shares were the rumors that the U.S. might not hike tariffs on chip imports any time soon, as the Trump administration takes a less hostile approach with China. Besides, a report that Samsung raised memory chip prices by as much as 60% since September led to a logical conclusion that the chip shortage will allow Micron to do the same. On the other hand, Micron’s CFO Mark Murphy told RBC Capital Markets’ conference that the company’s $18 billion annualized capex run rate faces upward pressure due to the necessary capacity expansion to keep up with demand and to make good on multi-year customer agreements. This signaled that investment is to rise next year, weighing on investor sentiment amid sector-wide valuation and capex jitters. Meanwhile, analysts remain unfazed by the moody markets, with Rosenblatt, Morgan Stanley, and UBS significantly raising MU’s price targets over the past week alone.
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❖ Nutanix (NTNX) has also had a difficult week, despite strong analyst sentiment and recent bullish initiations. JPMorgan lowered the firm’s price target to $78 from $81, keeping its “Buy” rating, while Oppenheimer initiated coverage with a “Buy” and a $90 PT, which implies an upside of more than 50%. In positive business development, NTNX announced that its Nutanix Cloud Platform will support Microsoft Azure Virtual Desktop in hybrid environments. This integration expands Nutanix’s hybrid cloud offerings, enhancing Nutanix’s competitive position and potentially supporting adoption and revenue growth. Still, the stock sold off amid general market volatility and investor caution around software sector valuations. NTNX is scheduled to release its fiscal Q1 2026 earnings on November 25.
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❖ Itron (ITRI) announced its agreement to acquire Locusview, an Israeli utility-focused software and services start-up, for $525 million. This acquisition, expected to close in January 2026, will be funded through cash on hand and aims to enhance Itron’s Resiliency Solutions offerings with Locusview’s digital construction management platform.
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❖ Applied Digital (APLD) stock remained under pressure over the past week as investors continued to digest concerns about the company’s high valuation and ongoing reliance on external capital to fund its ambitious AI data center expansion. The previously announced $2.35 billion senior secured notes offering is anticipated to close this week, with the proceeds slated to fund the construction of two data centers at the company’s Ellendale campus in North Dakota, repay existing loans, replenish debt servicing reserves, and cover related expenses.
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❖ Backblaze (BLZE) continues to suffer from lingering investor worries following a slight miss in its B2 cloud storage service revenue growth, despite overall strong results, as well as concerns over customer concentration risks. These would not have had such an outsized impact on shares had they not arrived amid broader rotation out of high-growth, high-risk AI names. The market setup is harsh, and we are not placing BLZE under review again since analysts apparently don’t see a problem, reiterating their “Buy” ratings – but we are keeping an eye on the developments, nonetheless.
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Under Review
❖ We are keeping Atlanticus Holdings (ATLC) under review, where we placed it following its Q3 earnings release.
Atlanticus delivered a mixed quarter: portfolio growth remained exceptional, but revenue and earnings fell short. Operating revenue rose 41% year-over-year to $495.3 million but still missed estimates due to a larger-than-expected fair-value markdown on loans. Net income dipped slightly to $22.7 million, and adjusted diluted EPS of $1.48 came in below consensus as higher costs and valuation adjustments outweighed strong receivables growth.
The revenue miss was almost entirely driven by the fair-value accounting swing. As assumptions around charge-offs, repayment timing, and discount rates all moved modestly against the company, the present value of the loan portfolio fell more sharply than modeled. That markdown cut into reported revenue even though underlying balances expanded meaningfully, especially with the Mercury Financial acquisition.
Cost and funding pressures compounded the issue. Interest expense surged 77% year-over-year to $75.5 million as Atlanticus carried a heavier debt load and legacy securitizations priced in the high-rate environment of 2023-24. Those costs will not materially reset until 2026. Marketing and servicing expenses more than doubled due to Mercury-related integration and acquisition efforts. While net margin improved year-over-year, it lagged expectations relative to the scale of receivables growth.
Strategically, the long-term shift toward a broader Credit-as-a-Service platform remains intact. The Mercury acquisition expands Atlanticus’s reach into near-prime credit, deepens its dataset, and supports its AI-driven underwriting model, though the transition is compressing margins in the near term. Early credit trends remain within modeled expectations, and portfolio quality is stable.
We continue to view the current headwinds – funding lag, integration costs, and fair-value volatility – as temporary. Receivables growth, both organic and acquired, remains strong, and the macro backdrop is gradually improving as rates decline and credit availability loosens. We expect Atlanticus to show continued top-line momentum, with more meaningful margin recovery beginning next year as higher-cost funding rolls off and mix shifts toward higher-yield segments. However, given reduced near-term visibility, we are keeping the stock under review – maintaining exposure while awaiting tangible evidence to confirm our thesis.
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This Week’s Top Growth Pick: CommScope (COMM)
CommScope Holding Company, Inc. is a communications-infrastructure company building the physical and software layers that keep modern networks running. Its portfolio spans wired and wireless connectivity, cloud-optimized access technologies, fiber solutions, and edge platforms that help service providers and enterprises move data with speed and reliability. Positioned between network operators and the devices they serve, COMM focuses on making high-capacity infrastructure simpler to deploy and easier to scale – whether for broadband rollouts, campus networks, smart-building systems, or next-generation mobile access. As bandwidth demand rises and networks shift toward virtualized, software-defined architectures, the company sits in the flow of long-term connectivity investment. Its role centers on delivering the components and intelligence that help customers upgrade, densify, and modernize networks in an increasingly digital and connected world.
Source: CommScope Website
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Changing Lines
CommScope’s roots stretch back decades, but its real inflection came far more recently, as global networks shifted toward fiber-deep architectures, cloud-driven traffic, and software-defined control. The company spent much of its history dependably supplying the cables, components, and connectivity hardware that kept networks running – yet rising expectations for speed, flexibility, and intelligent control pushed it to evolve beyond its traditional role.
The past five years have marked that transition. COMM pushed toward higher-growth technologies – fiber access, virtualized network elements, cloud-managed enterprise systems, and next-gen Wi-Fi – and prioritized innovation over scale for its own sake. The company’s RUCKUS brand – a long-respected name in enterprise wireless – became a larger strategic pillar as customer demand shifted toward cloud-orchestrated connectivity and AI-assisted network optimization. At the same time, CommScope advanced its access-network portfolio, introducing DOCSIS 4.0-ready1 platforms and refreshing its fiber solutions as cable operators prepared for multi-gigabit upgrades.
Strategic partnerships also shaped this period. Collaborations with major broadband operators validated its DOCSIS 4.0 and Remote PHY2 technology in real-world deployments, while work with hyperscalers and cloud-driven enterprises pulled CommScope deeper into data-center fabrics, high-capacity edge architectures, and campus modernization projects. These relationships helped shift the company’s center of gravity toward software-infused, high-performance infrastructure rather than legacy volume manufacturing.
In August 2025, the company took one more step that would define its next phase: the decision to sell its long-running Connectivity & Cable Solutions (CCS) unit. The move marked a cleaner strategic focus on its higher-growth platforms and set the stage for a broader structural reset that would follow. For a company often viewed as a broad hardware vendor, this represented a sharper focus on growth, margin expansion, and the modernization cycle sweeping through global networks. Earlier in 2025, COMM had already begun reshaping its footprint by selling its Outdoor Wireless Networks (OWN) and Distributed Antenna Systems (DAS) businesses – also to Amphenol. That divestiture helped streamline the portfolio and strengthen liquidity before the much larger CCS sale later in the year.
CommScope today is shaped far more by this recent reinvention than by its origins. The company that once supplied the physical backbone of connectivity is now leaning into technologies and partnerships that define where connectivity is headed – multi-gigabit access, intelligent enterprise networks, and cloud-aligned infrastructure built for the next decade of bandwidth demand.
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1 – DOCSIS 4.0 is a new cable-internet standard that boosts speeds into the multi-gigabit range by upgrading electronics rather than replacing existing coax lines.
2 – Remote PHY is a network design that moves key processing closer to end users, easing congestion and making high-speed upgrades simpler to roll out.
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Unplugged Momentum
The sale of CommScope’s Connectivity & Cable Solutions unit marked more than a portfolio adjustment – it was the moment the company redrew its identity. CCS had been the largest and most recognizable part of CommScope for decades, supplying the fiber and copper systems that filled data centers, central offices, and enterprise buildings around the world. It was a successful business, especially during the recent surge in AI-driven data center construction. But it was also capital-intensive, manufacturing-heavy, and structurally tied to slower growth cycles. For a company rebuilding itself around intelligence, software, and next-generation access, CCS belonged more to the past than to the future.
That made the August 2025 decision to sell CCS to Amphenol a defining break. The transaction – totaling about $10.5 billion in cash and expected to close in Q1 2026 – frees COMM from the debt load created by earlier acquisitions and gives it the flexibility to focus on the parts of the business with clearer long-term runway: broadband access platforms, cloud-managed enterprise networks, DOCSIS 4.0 systems, and the AI-assisted tools that sit on top of them. Instead of running a sprawling hardware portfolio, CommScope can now focus on ANS and RUCKUS – the segments already delivering its fastest growth and strongest margins.
While the sale transfers most of COMM’s legacy fiber and copper cabling portfolio to Amphenol, the company retains the fiber-based components embedded in its access-network platforms – the technology-critical pieces tied to DOCSIS 4.0, multi-gig broadband,3 and virtualized access systems.
The shift also simplified how the company operates. The tangle of factories, supply chains, and low-margin product lines that once dominated CommScope’s footprint gave way to a leaner structure built around technology, integration, and operator partnerships. With CCS exiting and the balance sheet reset, the remaining company no longer resembles a sprawling legacy vendor. What’s left is tighter, faster, and built for growth acceleration – a focused growth engine pointed straight at the next wave of broadband and enterprise-network investment. In stripping away the weight of its past, COMM has recast itself as a company built to move quickly, compound its gains, and convert an industry-wide upgrade cycle into sustained momentum.
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3 – Multi-gig broadband refers to internet service delivering speeds above 1 gigabit per second, typically in the 2-10 Gbps range, enabled by DOCSIS 4.0 and fiber upgrades to support faster, more reliable, and increasingly symmetrical connections.
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Multi-Gig Runway
CommScope today operates as a focused connectivity and networking platform, with the business remaining after the CCS sale resting on two growth pillars – Access Network Solutions (ANS) and RUCKUS. Together, they form a company aligned with the most powerful forces in digital infrastructure: multi-gig broadband, AI-driven data-center expansion, cloud-managed enterprise networks, and the federal push toward secure, standards-based connectivity.
ANS sits at the heart of CommScope’s operator-facing business. It supplies the platforms that move bandwidth from core networks to consumers and enterprises, including DOCSIS 4.0 amplifiers, Remote PHY devices, access nodes, and virtualized control systems. Demand for ANS is being powered by the largest broadband upgrade cycle in a decade, with major operators accelerating deployments of symmetrical multi-gigabit service and cloud-automated access networks. CommScope is the rare vendor offering the full DOCSIS 4.0 ecosystem, from smart amplifiers to unified ESD/FDX modules4 to vCCAP5 – a breadth that has helped cement deep partnerships with top-tier operators. Comcast’s rollout of CommScope’s AI-driven Full Duplex DOCSIS amplifiers across every market it serves underscores this advantage. ANS accounts for roughly 65% of the CCS-less company revenue today, while its technology footprint places it squarely inside a multi-year modernization cycle with a long runway.
RUCKUS serves the enterprise side of the business. Its Wi-Fi platforms, cloud-managed networking tools, and AI-assisted optimization engines power connectivity for campuses, venues, carriers, and distributed workplaces. The transition to Wi-Fi 7 is driving a new refresh cycle as enterprises adopt higher-capacity wireless to support collaboration, automation, and AI-based applications. RUCKUS contributes approximately 35% of total revenue ex-CCS, but carries strategic weight far above its share thanks to its subscription components and recurring cloud-management layers. These SaaS-like elements create stickier customer relationships and give COMM incremental recurring revenue tied to network intelligence rather than hardware volume.
Both segments benefit from the macro surge in AI infrastructure. Hyperscalers have committed more than $300 billion this year to expand data-center capacity, and global AI-related infrastructure investment is projected to reach $7 trillion over the next decade. That spending requires fiber, access platforms, high-capacity wireless, and smart connectivity at every layer – all domains where CommScope is already embedded.
Importantly, in November 2025, federal authorities published a regulatory filing that listed CommScope alongside Arista, Fortinet, Ubiquiti, and Extreme Networks – a group that represents the backbone of U.S. networking infrastructure. The document addressed industry-wide standards and compliance updates affecting equipment used in broadband, enterprise, and secure government networks. COMM’s inclusion signals an active role in shaping those standards and underscores its relevance in secure, compliant infrastructure across public-sector and commercial deployments.
With ANS and RUCKUS positioned at the center of broadband upgrades, enterprise modernization, and AI-era connectivity, CommScope’s business model now leans toward platforms that scale, software that compounds, and long-cycle infrastructure trends with meaningful room for share expansion.
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4 – ESD (Extended Spectrum DOCSIS) is a DOCSIS 4.0 approach that expands usable cable spectrum up to 1.8 GHz, allowing operators to deliver multi-gigabit speeds without replacing existing coax lines. FDX (Full Duplex DOCSIS) is a DOCSIS 4.0 mode that enables cable networks to send and receive data at the same time on the same frequencies, dramatically boosting upstream capacity for symmetrical multi-gig speeds.
5 – vCCAP (virtual CCAP) refers to software-based cable access control that replaces traditional hardware chassis, letting operators scale DOCSIS services more flexibly and manage networks through cloud-like architectures.
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Clear Signals
CommScope’s latest quarter marked another step in a transformation that is increasingly visible in its numbers. With the CCS divestiture nearing completion, the financial picture is best understood through the lens of the business that will remain – ANS and RUCKUS – and the quarter’s results show a company gaining clarity and momentum after years of complexity.
The company closed Q3 2025 with consolidated net sales of $1.63 billion, up 51% year-over-year and well ahead of internal expectations. But the more revealing story lies inside the continuing operations. Sales across ANS and RUCKUS reached $516 million, rising 49% year-over-year, extending a run of strong execution that has now produced six consecutive quarters of sequential adjusted EBITDA improvement. ANS led the charge with $338 million in revenue – up 77% – driven by heavy DOCSIS 4.0 deployments, early traction for virtualized access control, and accelerating demand for multi-gig upgrades. RUCKUS delivered $179 million, a 15% increase, as the Wi-Fi 7 refresh cycle gained speed and subscription-based management layers continued to expand.
Profitability followed the same upward arc. Adjusted EBITDA from the continuing operations reached $91 million, up 95% year-over-year and translating to a 17.5% margin – roughly 400 basis points stronger than a year earlier. Segment contributions highlight the shift toward a healthier mix: ANS posted a 169% jump in EBITDA as scale effects kicked in across DOCSIS 4.0 platforms. RUCKUS grew EBITDA 38% year-over-year, helped in part by a one-time benefit in the quarter, but even without that temporary lift, the segment continued to show underlying strength, supported by healthier channel inventory and rising Wi-Fi 7 demand. The one-time item won’t repeat in Q4, and management expects typical seasonal moderation, not a change in trajectory.
GAAP profitability has also steadied after a volatile period, as restructuring charges and acquisition-related costs have tapered off. On the non-GAAP side, the company has moved past the negative EPS it reported in Q3 2024, delivering four consecutive quarters of positive non-GAAP earnings. Non-GAAP EPS surged to $0.62 – versus the $0.37 consensus – while GAAP EPS rose to $0.38 per share. Taken together, the trend reflects a cleaner cost base and strengthening segment economics across ANS and RUCKUS. One point requires clarity: the reported EPS still reflects the full company, including the CCS segment, because the transaction has not yet closed. Until this process is complete, CommScope’s ongoing performance is better assessed through segment revenue, margins, and adjusted EBITDA rather than EPS.
Cash generation was another bright point in the earnings report. Operating cash flow reached $151 million and free cash flow came in at $135 million, helping lift the quarter-end cash balance to $705 million – up $134 million from Q2. Total liquidity now stands at roughly $1.28 billion. Working capital remains the primary swing factor quarter to quarter, and management expects continued positive cash generation in Q4 despite normal seasonal patterns in enterprise wireless.
The balance sheet still reflects the weight of the pre-divestiture company, with leverage at 5.5x. That will change radically once the CCS transaction closes in early 2026. Roughly $10 billion in net proceeds are earmarked to eliminate all outstanding debt and preferred equity, sharply reducing annual interest expenses and reshaping COMM into a far less capital-intensive enterprise. The company has already updated its outlook to reflect this momentum, raising full-year 2025 adjusted EBITDA guidance to $1.30-1.35 billion (from $1.15-$1.2 billion). Meanwhile, the expected EBITDA for the continuing operations – i.e., ANS and RUCKUS – was lifted to $350-375 million (from $325-$350 million). The updated ranges signal healthy year-over-year growth.
Viewed in total, the financial profile of the post-CCS CommScope is taking shape – steadier margins, meaningful cash generation, rising segment profitability, and a balance sheet about to be reset for the first time in more than a decade.
Source: CommScope Q3 2025 Earnings Presentation
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Upside Bandwidth
CommScope sits in a unique corner of the communications landscape, straddling broadband access for operators and cloud-managed networking for enterprises. Its most appropriate peers follow that same two-track structure. On the access side, Calix and Harmonic provide strong comparisons, each supplying next-generation broadband platforms tied to DOCSIS, fiber expansion, and virtualized access control. On the enterprise side, Extreme Networks and Ubiquiti offer a clear analogue to RUCKUS, with similar exposure to Wi-Fi refresh cycles, campus networking projects, and recurring cloud-management revenue. Taken together, these four companies reflect the scale, growth stage, and technology focus of the company CommScope is becoming.
CommScope’s stock far outpaced all of its peers this year, logging a gain of over 225%. The stock was gently chugging up along with most of its connectivity peers until the CCS divestiture announcement propelled it to the next level, with a surge of over 80% virtually overnight. Unlike the typical “sell the news” reaction seen in many growth stocks, COMM hasn’t shed any of that gain after the initial announcement rally, continuing to rise, albeit at a more restrained pace. Despite the year-to-date surge, analysts still forecast a potential upside of over 46%, as August’s jump is seen as a re-rating starting point rather than the end of the move.
Meanwhile, COMM’s valuations look strikingly low compared to its growth expectations and improved fundamentals. The company’s revenue and EBITDA growth are the fastest among peers, while its EBIT and net income margins surpass the group average even before the significant expansion forecast post-CCS. Despite this, CommScope’s forward GAAP and non-GAAP P/E and EV/EBITDA ratios, along with its trailing Price/Sales, are the lowest among its peers. At the same time, COMM’s trailing and forward EV/Sales, as well as its trailing Price/Cash Flow, sit well below the group mean. The company’s forward PEG of 0.84 – half the tech sector’s median value for this metric – is low in absolute terms and relative to peers, underscoring a classic GARP setup.
After several years of a buyback freeze following the ARRIS acquisition, CommScope’s board authorized a $50 million share-repurchase program earlier in 2025, signaling growing confidence in the company’s turnaround and cash-generation trajectory. Management has not provided details on its execution to date, and the program remains secondary to the near-term priority of eliminating debt once the CCS sale closes.
The multi-gig broadband cycle, the Wi-Fi 7 refresh, and the shift toward cloud-managed access are all still in early innings. As these tailwinds converge, CommScope has a path to compound revenue and margin expansion in ways its past structure simply couldn’t support. For investors, the real opportunity may lie in the gap between the company’s accelerating fundamentals and the market’s pace of repricing.
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To Sum It All Up
CommScope enters its next phase as a leaner, faster platform built for the infrastructure cycles shaping the decade ahead. With its legacy footprint carved back, the company now sits squarely in the slipstream of multi-gig broadband upgrades, cloud-managed enterprise networking, and AI-driven traffic growth. ANS and RUCKUS give it a dual engine: one rooted in the modernization of operator networks, the other in the rising density and intelligence of wireless campuses. The strategic reset is already showing up in execution – sharper focus, stronger mix, and a business finally aligned with the markets expanding around it. Yet the market still treats CommScope like the unfocused vendor it once was, not the streamlined growth platform it has become. What comes next is the runway to prove that mispricing wrong.
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Smart Growth Portfolio
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Disclaimer
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