Opinions
David Burrows
Lumentum Holdings
LITE-Q
BUY
Apr 19, 2017
$42.950
Stock price when the opinion was issued
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BUY
The caller asked for an evaluation of Lumentum in the context of its acquisition of Oclaro (OCLR-O). He says that this stock’s chart looks terrific. It shows a lot of momentum, good earnings growth momentum, the stock shows a lot of volume on its upside breakout. He can see this going to $80 quickly and expects it to do well over a 3-to-6-month time frame. However, you should set an exit point for every trade. For this stock, he recommends that you start reducing if it drops to $65 and get completely out if it reaches $60. He would also reduce if it pulls back below its 20-day moving average.
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TOP PICK
Stockchase Research Editor: Michael O'Reilly LITE is a maker of fiber optic network products, which are essential in the 5G rollout. The stock was recently negatively impacted when it announced it was deferring almost $15 million in quarterly revenue due to delays in 5G deployment in China due to the pandemic. It trades at 16x earnings and earnings growth is projected at 15% for the next five years, as it has averaged the past five. We would buy this with a stop loss at $60, looking to achieve $115 - upside potential over 46%. Yield 0% (Analysts’ price target is $115.14)
TOP PICK
Stockchase Research Editor: Michael O'Reilly We reiterate our recommendation of LITE (maker of fiber optic network products essential in the 5G rollout) as a TOP PICK. It trades at 17x earnings compared to peers at 38x. It continues to grow its cash reserves and buying back shares. We would buy this with a stop loss at $70, looking to achieve $100 -- upside potential over 17%. Yield 0% (Analysts’ price target is $96.76)
TOP PICK
Stockchase Research Editor: Michael O’Reilly We again reiterate our recommendation of LITE (maker of fiber optic network products essential in the 5G rollout) as a TOP PICK. It trades at 19x earnings compared to peers at 65x. Recently reported earnings matched expectations and the company is managing a ROE of 18%. It continues to grow its cash reserves while buying back shares. We continue to recommend a stop loss at $85, looking to achieve $113 -- upside potential over 18%. Yield 0% (Analysts’ price target is $113.00)
TOP PICK
Stockchase Research Editor: Michael O'Reilly As the company continues to develop 3D sensing products essential to the automotive and industrial sectors, we again reiterate LITE as a TOP PICK. It trades at 18x earnings compared to peers at 31x. Recently reported earnings matched expectations and the company is managing a ROE of 17%. It continues to grow its cash reserves while buying back shares and retiring debt. We continue to recommend a tight stop loss at $85, looking to achieve $116 -- upside potential over 32%. Yield 0% (Analysts’ price target is $115.92)
PAST TOP PICK
(A Top Pick Apr 12/22, Down 2%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with LITE has triggered its stop at $85. To remain disciplined, we recommend covering the position at this time. This will result in a net investment gain of 2%, when combined with our previous buy recommendation.
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He really likes the fibre networking space, and this company sells components into that area. This has pulled back in the last couple of weeks as some of the more economically sensitives have pulled back.