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Adtran's Adding 'ProValue' Ahead of Earnings

NEW YORK ( TheStreet) -- On April 9, I told investors to buy shares of Adtran (ADTN - Get Report) ahead of the company's first-quarter earnings report.

This was at a point when the stock had fallen to a low of $18 in the preceding trading sessions. But after Adtran had suffered a brutal 2012 -- losing 34% of its value due to poor carrier spending -- I felt that the worst was over.

However, the bet was really on the company's management team, which I've always felt was an underrated bunch. I also believed that carriers including Verizon (VZ) and AT&T (T) could only starve themselves for so long until their competitive positions would come under pressure. At some point they would have to loosen their purse strings. I felt this played well into the hands of communication companies like Adtran, making the shares very interesting.

So far it's worked out perfectly. In the April quarter, the company posted adjusted earnings of 17 cents per share on revenue of $143 million - beating on both top and bottom line estimates. Since the $18 low on April 5, the stock has been up close to 40% when counting the $24.86 high on June 28. But I can't take full credit, though. Even so, since my buy recommendation on April 9, the stock is up 30%. Investors want to know if it's time to take profits.

Look, I will never be opposed to anyone locking in gains at any point and on any stock. Profits are hard to come by as it is. However, in the case of Adtran, given how well this company is performing, I don't believe that's the right question to ask, especially with Cisco (CSCO) and Ciena (CIEN) showing clear signs of an imminent rebound in communications expenditures.

With second-quarter earnings due out on Tuesday, Adtran has begun to look for ways to leverage the improved carrier spending environment by launching several new "Pro" services aimed at empowering its customers and partners to select individual components to match their service delivery needs.

This is a new program that is comprised of the three elements of ProStart, ProCare and ProCloud. Todd Lattanzi, the company's director of product management for Enterprise Networks Division, said this portfolio includes advanced solutions and a variety of services that can be tailored for each unique customer's needs. The program is backed by Adtran's network expertise to ensure complete customer satisfaction.

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