After a long downtrend that started in August 2017, Applied Optoelectronics (NASDAQ: AAOI) broke out, potentially marking $22.54 as the bottom. At $30.19, the stock is above $30, a level not seen since the start of 2018. AAOI’s 8.9 times P/E may get value investors interested in the stock but it was Rosenblatt’s optimism sending the stock higher on the week.
Rosenblatt analyst Jun Zhang suggested the price declines from Chinese firms would spur higher demand for AAOI products. While speculative, the commentary gave the 100G sector a lift. Finisar (NASDAQ: FNSR) bottomed at $14.25 and closed at $16.28, Acacia Communications (NASDAQ: ACIA) bottomed at $35.68 to close at $40, and Lumentum (NASDAQ: LITE) bounced back, rising 8.7 percent last week.
The high short float of 71% may have squeezed bears last week, as trading volume surpassed the average. Applied Opto is still over a month away from its next earnings report. Chances are poor that the company will report a rebound in orders. It may forecast a return on deals for the rest of the year but without that, AAOI stock could resume its decline. Still, the stock is a compelling value speculation even at $30. For more conservative investors, Lumentum may hold less risks due to its more diverse customer base.
