The buying opportunity we've all been waiting for in Ciena (CIEN)

As a result of this there is one obvious implication -- there is going to be clear demand for bandwith in coming years and we are going to watch the telecom companies, such as Verizon Communications (NYSE: VZ), "build-out" to enhance their bandwith capabilities.

I've already highlighted one company that I believe will benefit from this build-out, Level 3 Communications (NASDAQ: LVLT), however with the recent credit-raising issues I think the stock has become less attractive because of its acquisition-based strategy. That being said, I think the stock still has room to run as Level 3's recent slew of acquisitions become accretive.

Similarly, Ciena makes a variety of products that are used as companies build out their bandwith levels. While I'm not going to get into the technicalities of the company's products, I'd like to cover some of the basic fundamentals for the stock.

First and foremost, Ciena doesn't have the debt/credit-related issues that Level 3 has simply because of its incredible balance sheet. This factor alone, in my opinion, makes the stock drastically more attractive than Level 3, especially because of the potential headline risk facing Level 3.

Ciena also stands to show rapid growth in this year and through next year. This year the company stands to earn almost $1.15 per share according to my models -- slightly above the street's estimate of $1.11 per share. When comparing this to last year's 30 cents per share, the growth is clearly incredible. While this is certainly attributable to revenue growth (+37%), much of this growth is the result of margin improvements and the like.

Going into next year, I think the company is capable of earning $1.55-$1.60 per share, roughly in-line with the street's estimate of $1.54 per share. This slowdown in growth (year-over-year) is attributable to less margin expansion and decreased revenue growth. However, revenue growth should still clock in at more than 20%.

While I admit the stock is not very attractive on the valuation front, at 23x next year's earnings I think the street isn't going to re-price the stock on a valuation basis with the incredible macroeconomic and thematic tailwinds behind the stock.

More importantly for traders, the stock currently appears to be at an attractive buying point when looking at the chart:

First and foremost, the uptrend in the stock remains in-tact even after the market's recent sell-off. This is significant because many stocks managed to break their uptrends in the recent slide in stocks, even the S&P 500 itself.

In addition, I think the stock's current level is interesting for buying for a couple reasons:

• The stock is currently sitting at the 50-day moving average and the bottom Bollinger band. To a person who doesn't follow technical analysis this probably doesn't mean much but the theory is that "dip buyers" tend to come in when a stock pulls back to its 50-day moving average. The bottom Bollinger Band tends to represent an oversold condition.
• The stock is oversold according to the Stochastic oscillator. As I covered in a recent post, this tends to mean that the market has irrationally sold off the stock to an "oversold" condition, theoretically opening the opportunity to a bounce.

I believe that shorter-term traders would probably keep a stop within a point or two -- betting that the 50-day moving average holds. While intermediate-term traders would probably like to keep a loose stop in because this is a very volatile stock -- for example, the $32 range would make sense because the stock should have support around the gap-up level.

Adding it all up, I think the fundamental thesis behind Ciena makes tremendous sense. However, that doesn't mean the stock is attractive here. Despite the lack of undervaluation, I think the stock still has room to run from looking at the chart.