Chris Lau
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Chris Lau in Value Stocks,

How to Trade or Invest in Applied Optoelectronics (AAOI)

via user qwqs:

If you're a trader, you're probably looking to time the market and buy swings. AAOI just posted decent earnings after tumbling hard for the last few months. They are going to make a jump tonight and tomorrow, probably something like 10 to 15%. After that you'll see some people taking profits and it'll dip another 5% or so until the next catalyst sends it one way or another.

$AAOI, Applied Optoelectronics, Inc. / H1

If you're a trader, you're probably looking to time the market and buy swings. AAOI just posted decent earnings after tumbling hard for the last few months. They are going to make a jump tonight and tomorrow, probably something like 10 to 15%. After that you'll see some people taking profits and it'll dip another 5% or so until the next catalyst sends it one way or another.

If you're new, don't trade. Invest long term. Look at AAOI and their financials. They have a great price to earnings, but they also just lost a lot of business from their top customer. Growth has greatly slowed, but their margins are improving very nicely. In my mind, their fair value now is $55, and I think there's considerable long term upside from there depending on how the industry moves. So if you believe in the industry's growth, they are one of the best and are discounted because of some major management blunders right now, so I'd say if you want a long term position you should open it without worrying about the daily swings. BUT keep in mind that management lost trust for good reason, and their screw ups do add risk despite a great product and some excellent metrics.


But the MOST important thing to know, is don't take anything anyone here says as more than just amateur speculation (including/especially myself). We're all just fellow investors here, so you should do your own due diligence, follow the market for some time before buying in, and space out your purchases on a certain company in case of big negative price swings. Really though, the market is so damn inflated right now that if you just collected your cash for some time you'll find a ton of bargain bin prices at your disposal at some point.

Related: Oclaro (OCLR), CIena (CIEN).