Arista Networks: (ANET) Buy, $$245 One year target $280.
Invest 5 Years, 16-20% annual return. P/E 34, 3-5 year EPS growth 14-16%.
Best large-scale network provider for hyperscalers like Meta and Microsoft. Unlike Cisco (CSCO), Arista didn’t focus on selling gear, instead, it partnered with hyperscalers to build their networks and platforms from scratch. This is a unique competitive advantage and very profitable too; Arista boasts the best margins (32% operating profit) and cash flow in the industry. It is a bit expensive with much of the Earnings growth of 44% in 2023 already priced in, with the stock doubling from $120 last year. Still, an excellent long-term play as the pick and shovels play for AI and high-speed data networks; it tends to surprise so the EPS growth could likely be higher.
I’ve owned it since May 2023 and I add on declines, my last purchase was around $231.