A year ago today I added to my Finisar (NASDAQ:FNSR) holdings at 24¢ (This is $1.92 at today's split adjusted price)
Today, Finisar is at $12.89!! (or $1.61 at the pre-split price). The gain is (12.89-$1.92)/$1.92x100% = 571%.
What were you doing a year ago? Buying or selling?
Going forward, I still like Finisar and hold it in both new personal and newsletter explorer portfolios.
Excerpts from the March issue of "Kirk Lindstrom's Investment Letter" about Finisar:
On February 9 Finisar said it expects to report revenues of $166 to $167M for its fiscal Q3 ended January 31, 2010. Its prior revenue guidance was $148 to $158M. In the absence of a material adjustment, Q3 revenues will set a new record for Finisar surpassing the previous combined sales for Finisar and Optium of approximately $163M for the fiscal quarter ended July 31, 2008, just prior to the merger of the two companies and the market melt-down. Based on these projections, Finisar expects to be at the upper end of its original guidance for Q3 on a non-GAAP basis of 30%-32% for gross margin and 6%-8% for operating margin. Sequential revenues will be up about 14.3% over Q2-2010 and 32.1% over last year, Q3-2009! This is the great performance I expected and expect to continue. It is why I bought so many shares of Finisar during the downturn.
6%-8% operating margin on $166 to $167M revenue implies earnings between $10.0M and $13.4M or 15¢ to 21¢ per share.
Finisar should continue to grow operating margin as the costs from merging with Optium end and the new efficiencies take hold. Margins will also improve with volume which I predict will continue to grow at a high rate for many years, subject to gyrations of the economic cycle.
I think FNSR could easily do $1.00 per share in 2011 where a PE of 20 for their growth would be very reasonable. Add in some exuberance as others jump on the bandwidth-wagon and a PE of 40 would be a good target to take major profits at. I find it amazing that FNSR is still cheap with a PE of only 13.5 on FY 2011 earnings. FY2011, only months away, is when we will get FY2012 earnings estimates that should be significantly higher. I expect we will see $20 in a year, if not sooner.