Leading tech stocks like Google parent Alphabet (GOOGL), Microsoft (MSFT), Zoom Video (ZM), Cisco Systems (CSCO) and Ring Central (RNG) have an ever-growing demand for fast and robust communications technology. Enterprise software leader Bandwidth (BAND) provides each of these companies with the application programming interface (API) to handle their needs.
Already among the leading growth stocks to watch, Bandwidth stock has earned a spot on the IBD Breakout Stocks Index.
While Bandwidth did not join Zoom stock on the latest list of new buys by the best mutual funds, the Raleigh, N.C.-based company has shown solid institutional sponsorship. It sports a 1.4 up/down volume ratio and three quarters of rising fund ownership.
Plus, 93 top funds with an A+ rating from IBD report owning shares in Bandwidth stock, including Wasatch Micro Cap (WMICX) and Alger Small Cap Growth (ALSCX).
Bandwidth Helps Microsoft, Google, Zoom Get Dialed In
As leading cloud computing companies, Google, Microsoft, Zoom Video, RingCentral and Cisco all use Bandwidth’s APIs to embed voice and messaging access into software and applications.
Bandwidth is the first and only CPaaS (Communications Provider as a Service) provider offering a selection of communications APIs built around its own nationwide internet-based voice network. Bandwidth’s network is one of the largest in the nation. Bandwidth is also the only API platform provider that owns a Tier 1 network, giving customers better quality, rates and control.
As the pandemic has driven work-from-home and remote-learning trends that lifted Zoom stock, Microsoft and other cloud stocks, Bandwidth has also tapped into that zeitgeist.
Revenue growth has accelerated for three straight quarters, coming in at 40% in Q3. While not yet profitable, Bandwidth has been moving strongly in the right direction. Based on comparisons to prior-year quarters that showed losses, the company posted triple-digit increases in each of its past three reports. That includes a 500% rise in Q3.
It’s not uncommon to see newer IPO stocks like Bandwidth post strong sales growth before earnings begin to appear. The API provider went public in November 2017.
After 125% Run, Bandwidth Stock May Dial In New Breakout
As Zoom stock bases, Microsoft nears a buy zone and GOOGL stock tests support, Bandwidth stock is trying to dial in a breakout past its 198.70 buy point.
After breaking out in May, Bandwidth shot up as much as 125% before starting to form its current chart pattern. Along the way, the stock consistently found support at its 10-week moving average. Bandwidth stock fell below that benchmark line while basing, but has now recaptured it.
The relative strength line for Bandwidth continues to rise sharply as it tries to close in on a new 52-week high.
See if Bandwidth stock can ring in the New Year by climbing past the buy point in volume at least 40% above average.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF (BOUT) from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this allows you to essentially invest in the entire index in addition to or rather than buying individual stocks. Learn more about the ETF and Innovator funds.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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