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Why the Netlinkz share price is up 600% in 2019

While the S&P/ASX200 Index (ASX: XJO) enjoyed its best 6-month start to the year since 1991, there was one Aussie cloud solutions company rocketing: Netlinkz Ltd  (ASX: NET).

The Netlinkz share price has rocketed 633% higher so far this year as the company has continued to post strong lab testing results and client expansion in the past 7 months.

Why is the Netlinkz share price surging in 2019?

Netlinkz has shown an ability to continue its operational expansion, most recently announcing an expansion of its Chinese distribution network.

Netlinkz announced that a Strategic Cooperation Agreement (SCA) has been signed between Sichuan Meixunda Communications Corporation, a wholly-owned subsidiary of China Communications Services Corporation Limited, and its China-based reseller – JAST Limited.

According to the release, the three major telecom operators in China – China Telecom, China Mobile and China Unicorn are shareholders and customers of China Communications Services.

JAST CEO Yang Chuan was quoted as saying, “I am very excited that JAST has achieved a strategic cooperative partnership with Meixunda. The cooperation with Meixunda will start from Sichuan Province, and gradually expand to the five southwest provinces in China. It is a fantastic opportunity for the distribution of NetLinkz’s products.”

What else has been fuelling the Netlinkz share price?

In mid-March 2019, Netlinkz announced that Blue Tech (a US Federal Government IT solutions provider) would lab test its virtual invisible network solution (VINs) cybersecurity software which raised shareholders’ hopes of future profitability.

The Netlinkz share price rocketed 22% in June on news that Blue Tech’s lab testing of its cybersecurity SDWAN VIN software was a success, as the company said it found “no issues with connectivity over Virtual Invisible Networks (VINs) whatsoever.”

Is Netlinkz in the buy basket?

While shareholders at the start of the year have benefitted hugely from Netlinkz’ 2019 surge, I’m not convinced that its current $0.22 valuation is a fair reflection of its true value.

I’m wary of some of the top Aussie tech stocks given where we appear to be in the economic cycle, meaning I’m more inclined to consider blue-chip dividend stocks such as Commonwealth Bank of Australia Ltd (ASX: CBA) or Telstra Corporation Ltd  (ASX: TLS) for the time being.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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