Aviat Networks Inc: Contrarian Investors Could Profit From This 5G Stock

AVNW Stock Is Compelling After Recent Selling

Selling capitulation dominated the stock trading in three of the first four months of this year. My view is that the selling has been excessive, and that it provides an aggressive contrarian opportunity to accumulate shares at lower entry points.

That’s the case with Aviat Networks Inc (NASDAQ:AVNW), a provider of microwave technologies that are integral in wireless infrastructure. Aviat Networks stock is even more compelling when you take into consideration the significant push behind 5G technologies in the U.S.

Think about it. The demand for 5G wireless technology is huge, and will drive up the value of 5G stocks.

Consider the need for super-fast bandwidth in next-generation technologies such as autonomous vehicles, virtual reality, and artificial intelligence. 5G-related companies like Aviat Networks Inc have tons of opportunities to develop and sell networking and communication solutions.

I believe AVNW stock could provide significant price appreciation to patient investors who are willing to accept volatility.

Aviat Networks Stock Has Attractive Risk/Reward Ratio

The following Aviat Networks Inc long-term stock chart shows a strong rally from its March 2020 low. That rally was powered by a golden cross pattern in June 2020.

Chart courtesy of StockCharts.com

The subsequent buying resulted in several channel breakouts. AVNW stock has been trading in a long sideways channel since March 2021. Aviat Networks stock has been drifting lower, near channel support around $28.00.

At one point in April 2021, shares of Aviat Networks Inc were up by nearly 400%, but like the rest of the market, AVNW stock has been under pressure and unable to mount a sustainable upside move. Aviat Networks stock was trading at $42.81 in June 2021, just off its record high of $43.76 in April 2021.

As the following one-year Aviat Networks Inc chart shows, AVNW stock fell to a 52-week low of $24.26 in February 2022, prior to staging a small bounce.

Chart courtesy of StockCharts.com

Shares of Aviat Networks Inc have been drifting sideways and unable to mount a move toward the channel resistance around $35.00.

Watch for buying around $26.00 to $28.00, which is where Aviat Networks stock currently sits. The downside risk is $24.00 to $26.00.

A recovery of the 50-day moving average of $29.71 could see AVNW stock take out the 200-day moving average at $31.38. Above this is channel resistance at $35.00, followed by $40.00 and the stock’s high.

Analyst Take

Aviat Networks Inc has ample opportunities to benefit from the high demand for advanced networking and 5G technology.

With Aviat Networks stock trading around 35% lower than its 52-week high, it could be time to take a closer look. While the stock could trend lower, I like the current risk/reward opportunity to buy low and sell high.

My opinion is that 5G stocks like AVNW stock could return above-average gains to contrarian investors who are patient.