II-VI Incorporated (IIVI)

(A Top Pick Apr 14/22, Down 6.3%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with IIVI has triggered its stop at $58.50. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 11%, when combined with the previous buy recommendation.

Stockchase Research Editor: Michael O'Reilly We again reiterate this semiconductor and photonic solutions specialist as a TOP PICK. The unfortunate timing of a recent acquisition resulted in a large short position being established. However, now that the deal is expected to be completed by mid-May, this will open the door for the strategic development plans for its augmented and virtual reality, 3D sensing, AI and data center applications. Analysts expect this will enhance earnings next year resulting in a PE of 14x, compared to peers at 21x, which should soon begin to force the buying back of short positions against it. We continue to recommend a tight stop at $58.50, looking to achieve $83 -- upside potential of 33%. Yield 0% (Analysts’ price target is $82.80)

Stockchase Research Editor: Michael O'Reilly After beating earnings expectations by 24%, we again reiterate this maker of industrial optic and laser components as a TOP PICK. The company established record bookings of over $1.1 billion and saw its order backlog grow by 58% and it remains well positioned to benefit from 5G rollout, cloud migration, and EVs. We like that it has continued to increase cash reserves. We recommend keeping the stop at $58.50, looking to achieve $85 -- upside potential over 20%. Yield 0% (Analysts’ price target is $85.00)

Stockchase Research Editor: Michael O'Reilly This maker of industrial optic and laser components, is once again reiterated as a TOP PICK. The company remains well positioned to benefit from 5G rollout, cloud migration, and EVs. We like that it has continued to increase cash reserves, while reducing debt. It trades at 15x expected next year earnings compared to peers at 23x. We recommend trailing up the stop to $58.50, looking to achieve $91 -- upside potential over 27%. Yield 0% (Analysts’ price target is $90.62)

Stockchase Research Editor: Michael O'Reilly We reiterate IIVI, a maker of industrial optic and laser components, as a TOP PICK. The company remains well positioned to benefit from 5G rollout, cloud migration, and EVs. It is investing over $1 billion over the next 10 years to focus on highly efficient semiconductors for EV adoption. It issued over $2 billion in new equity, giving it a solid cash position to do so. It trades at 26x earnings compared to peers at 30x and earnings are expected to be $4.48 per share next year compared o $2.28 this year. Sales have been growing over 30% annually for the past five years. We would buy this with a stop loss at $50, looking to achieve $85 -- upside potential over 38%. Yield 0% (Analysts’ price target is $85.12)

Stockchase Research Editor: Michael O'Reilly IIVI is a maker of industrial optic and laser components and is very well positioned to benefit from 5G rollout, cloud migration, and EVs. This will be particularly true following its merger with another laser maker, which is subject to a shareholder vote June 24. Recently reported earnings of $0.91 EPS, beat analyst expectations. Revenues rose 25% and the company reports a backlog of orders exceeding $1.1 billion. The company has been adding cash reserves, which now is estimated over $1.4 billion. It trades at 29x earnings, compared to peers at 42x. We would buy this with a stop loss at $50, looking to achieve $90 -- upside potential over 32%. Yield 0% (Analysts’ price target is $90.00)