Shares of Applied Optoelectronics made an all-time high (intraday) of $72.95 per share on an almost 40% increase in share volume this past Friday before closing the day and the week at $71.51 per share.
In the past I have written about the company in particular and the sector in general which has been plagued by rumors, innuendo and in a lot of cases downright lies about the sector in relation to the demand in China.
Just last week I had an article out on this platform talking about the potential for high returns on investment in this sector.
In very early May, I had another article out on Applied Opto when the shares were trading below $47 per share talking about the appreciation potential in the stock.
Shares are up almost 52% since that article in early May and the ride is more than likely still not over by any means.
Take a quick look at the following:
About 3 months ago, Wall Street analysts expected Applied to earn $2.54 per share for FY18. About two months ago, those estimates were raised to $3.70 per share, a month ago they were further raised to $4.15 per share and currently those same analysts are expecting the company to earn a little over $5 per share. Taking that current earnings estimate of $5 per share and giving it a reasonable multiple of 20x forward earnings gives us $100 per share which still leaves almost 30% of upside in Applied Optoelectronics.
It's just not Applied Optoelectronics that provides an excellent way to profit from the ongoing build-out in China in the 100G sector and the current global build-out and investment in the data-center space. Other companies that are also poised to benefit from the growth in the same two sectors include the likes of Oclaro, Lumentum, Acacia Comminications among others.
Shares of Applied Optoelectronics closed at $71.51 per share while shares of Oclaro, Lumentum and Acacia closed at $8.91 per share, $58.50 per share and $47.97 per share respectively on May 26, 2017.
Words to the wise.
(Long aaoi, oclr, acia, longa dn short options in all 3)