Inseego Corp: How This 5G Play Can Double Via Huawei Conflict

Inseego Could Benefit from Trump-Huawei Battle

Unless you have been lounging on a deserted island and off the grid, you are probably quite familiar with the U.S. administration’s current battle against Huawei Culture Co Ltd and the development of its “5G” technologies.

There is a widely held belief that the United States is trailing the world in 5G technologies—the next battleground for innovation and a critical area for the future of technology.

Simply put, 5G speeds are incredibly fast and will allow new technologies and applications to be developed. This is why there is so much fuss toward Huawei.

With the administration set to block the sale of key hardware and software to Chinese tech companies like Huawei, the move will open the door for domestic 5G players including small-cap Inseego Corp (NASDAQ:INSG).

Trading at around 25% off its 52-week,high of $6 in January, INSG stock is worth a look on any price weakness, given the stock is up 123% over the past year.

My bull thesis towards Inseego stock is based on the company’s mobile technologies for high-growth areas such as the “Internet of Things” and 5G

The INSG stock chart shows the upside breakout from the previous accumulation channel to the record high in January, prior to the subsequent retrenchment to more attractive entry points for Inseego stock:

Chart courtesy of StockCharts.com

Why INSG Stock May Be Primed for a Jump

A look at the revenue picture for Inseego Corp shows a company looking for a breakthrough in jump-starting the growth rate.

Revenues edged higher from 2014 to 2016 prior to easing off in 2017 and 2018.

(Source: “Inseego Corp. (INSG),” Yahoo! Finance, last accessed June 14, 2019.)

But things are looking a bit brighter over the next two reportable years.

Inseego is expected to ramp up revenues by 11% to $224.7 million in 2019, followed by 22.7% to $275.68 million and as high as $312.65 million in 2020. (Source: Ibid.)

If the company can successfully develop 5G technologies, the upside estimates may prove to be conservative.

Inseego is continuing to burn through cash, but the loss fell between 2016 and 2018.

For 2019, Inseego Corp is expected to narrow its loss to $0.02 per diluted share and could make a profit of $0.03 per diluted share.

The earnings growth is expected to accelerate, with Inseego earning $0.26 per diluted share and as much as $0.33 per diluted share in 2020. (Source: Ibid.)

Analyst Take

Based on the current $4.59 share price, INSG stock is trading at an attractive 13.59 times its high estimate for 2020.

For such as small company, Inseego Corp has decent institutional support, with 79 institutions owning around 79.18% of the outstanding shares. (Source: Ibid.)

So if you believe in the massive potential for 5G technologies, Inseego stock may prove to be a major benefactor of the 5G war.