The next company in my ongoing series of the top 25 stocks for the NEXT 25 years is CBeyond, Inc (NASDAQ: CBEY). CBeyond has a market capitalization right at $1 billion. The company has an opportunity to be a dominant player in the total communications to the small-to-medium business sector.
CBeyond is a communications service provider (CSP), marketing to the small-to-medium business sector, as defined by 2 to 300 employees. The managed services offered by CBeyond include local voice, long distance and broadband internet access. Other services include e-mail systems, unified messaging, virtual private network (VPN) for remote users, and secure backup and file sharing. Soup to nuts, CBeyond offers the smaller enterprise the full package of communications with ease of use and simplified pricing programs.
The systems are delivered through T1 circuits right on the customer's premise and CBeyond guarantees carrier-grade quality of service and functionality. Most customers sign up for 3- to 5-year contracts, thus providing CBeyond with excellent revenue visibility going forward.
Small-to-medium business enterprises are ripe for bundled services, as CBeyond offers the one-stop shopping convenience for these enterprises. CBeyond monitors the "what's new" factor for its customers and builds in to the contracts, the upgrades when available. This allows the end customer to not be concerned about what is new in the technology world. CBeyond provides the so-called peace-of-mind solution.
The small-to-medium enterprise is sold to directly by CBeyond sales and marketing reps. The company has also partnered with other small carriers to offer the CBeyond solutions. As broadband becomes more and more mainstream, CBeyond's market opportunity becomes huge and widespread. Also, as small-to-medium businesses look for the single vendor solution as opposed to the piece-meal approach, CBeyond becomes the vendor of choice.
I estimate CBeyond' s revenues for 2007 at $280 million, with earnings per share of 46 or 47 cents. For 2008, CBeyond can have a breakout year with revenues approaching $385 million and earnings per share of 80 to 82 cents. The company has the chance to be a multi-billion dollar enterprise with a strong loyal customer base and ever-improving margins.
CBeyond could be one of the top 25 stocks for the NEXT 25 years.
Georges Yared is the CIO of Yared Investment Research. For growth stock ideas in additional to the top 25 for the NEXT 25 years, visit the website.
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Reader Comments (Page 1 of 1)
6-05-2007 @ 12:53PM
Rock said...
I would be interested to know what Cbeyond's network planning strategy will be after the ILECs no longer have to support low rate telric loops (UNE/EEL), 3.5 years from now. Assuming Cbeyond doesn't have another exit strategy, their hope must lie in new last mile technologies - WiMax/Fixed Wireless.