NEW YORK ( TheStreet) -- Placing bets on telecom stocks requires faith that carrier spending will rebound. But this is precisely what industry experts believe happen -- to what extent remains to be seen.
However, because the entire sector reached such depressed levels in 2012 there's a prevailing notion that, well... how much worse can 2013 be? This year if the sector recovers only 1/3 of its 2012 losses, investors would do very well.
Here are a couple of names to keep an eye on.
Ciena (CIEN)I'm going to lead off with Ciena. The stock is currently trading at $16 but in 2012 it was all over the map. I've always wanted to like Ciena but the company has not been able to escape its rut -- at least not to the extent that I would like. Also, recent earnings didn't exactly woo investors over much cheaper rivals. For the period ending in October, Ciena reported a non-GAAP loss of 7 cents per share on revenue of $465.5 million. The company missed on both the top and bottom lines as Street estimates called for a loss of 6 cents on revenue of $468.3 million. Although revenue dropped almost 2%, it was encouraging that sales advanced 2% year over year. On a GAAP basis, the company lost $38.8 million, or 39 cents per share. The company's main challenge continues to be profitability. Adjusted gross margin was 42.7%, worse than 43.2% logged a year ago. Then again, it was a 3% improvement from the third quarter. The outlook remained somewhat cautious. Management offered revenue estimates ranging from $435 to $460 million, in line with analysts' expectations. But is that enough to place a bet on the stock today? However, on a relative basis they are pretty consistent with the guidance provided by rivals Cisco (CSCO) and Juniper (JNPR). I like the stock at these levels. If Ciena can show it can innovate and leverage its existing technological advantage to fight off pricing pressure, the stock should reach $20 by the summer. Also, the company has to show investors that its increase in R&D expenses have not been in vain.
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