Seeking Alpha: Finisar Still Looking For Leverage

"Picks and shovels" is a popular trope in investing and sometimes there is logic to it - instead of trying to pick winners and losers in industries like oil/gas exploration and mining, sometimes it makes more sense to invest in the service and equipment providers. The details really do matter, though, and going the picks-and-shovels route doesn't serve investors as well when there are plenty of pick-and-shovel vendors and the buyers can play them off each other for better pricing.

Finisar (NASDAQ:FNSR) continues to be a tough case to evaluate within the networking universe. I thought the shares looked washed out back in September of 2014 and the shares have risen almost 20% since then, matching fellow components supplier JDSU (NASDAQ:JDSU) and broadly tracking customers like Ciena (NYSE:CIEN) and Cisco (NASDAQ:CSCO). On the other hand, the company's operating performance hasn't been stellar and particularly so at the margin line.

I am unconvinced that Finisar is a stock that readers should consider as a long-term holding, but I do believe it has more positive attributes as a shorter-term play. Ciena and Cisco should see 100G metro orders pick up next year as a Verizon deployment picks up, and a better CFP2 module and capacity constraints at rival Oclaro (NASDAQ:OCLR) should help the datacom business as Web 2.0 deployments pick up. A recovery in margins could run the shares into the high $20's (or higher), but I think investors should go into this thinking "whirlwind romance" and a long-term engagement.

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Finisar Still Looking For Leverage

Seeking Alpha: Will 2015 Be A Real Growth Year For PCTEL?

PCTEL (NASDAQ:PCTI) has been a frustrating stock for some time now. While the company has refocused around businesses with credible addressable markets and growth potential in antennas and test equipment, the stock has gone nowhere fast over the last three years (though to be fair, equipment/component supplier JDSU (NASDAQ:JDSU) has done even worse).

Will 2015 be a different, better, year for PCTEL's shareholders? China Mobile's (NYSE:CHL) more aggressive roll-out of TD-LTE is a real opportunity for the company, given its relationship selling scanning receivers used to test LTE deployments. A strong contribution from this higher-margin business would indeed be welcome, but PCTEL really needs to see markets like WLAN, smart grid, fleet management, and so on pick up (and use their antennas) to maintain that momentum. If PCTEL can leverage these opportunities, a share price above $10 seems reasonable in the near-term.

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Will 2015 Be A Real Growth Year For PCTEL?

Seeking Alpha: NetScout's Performance Management Managing Good Performance

Competing with a varied mix of hardware, software, and integrated rivals like Danaher (DHR), IBM (IBM), and CA (CA) is no picnic, but NetScout Systems (NTCT) believes it has found a winning combination with a mixed hardware and software approach to network and application performance management. The company still generates the bulk of its revenue from three verticals (finance, telecom services, government), but the relatively new nGeniusONE platform should meaningfully expand its addressable market and could fuel strong growth for multiple years. While backward-looking valuation metrics may not scream "bargain" on these shares, high single-digit free cash flow would support a fair value in the mid-$40s.

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NetScout's Performance Management Managing Good Performance

Seeking Alpha: Finisar Has Room To Run On Data Center And Telecom Upgrades

Optical components supplier Finisar (FNSR) has a lot going for it. The company has leading share in the $6 billion-plus optical components market and good technology in attractive markets like 10G/40G/100G transceivers and transponders, tunable XFP, and WSS/ROADM. What's more, with a significant data center switch upgrade cycle and ride-along potential in telecom with clients like Cisco (CSCO) and Huawei, growth over the next few years ought to be good.

The real question for Finisar is whether a reader is comfortable buying a stock that is highly unlikely to be a good long-term holding. Consistent revenue and FCF growth in this market has been all but impossible, and threats like silicon photonics loom on the horizon. I believe that Finisar shares still look pretty interesting for the next year or two, but I would be careful not to push my luck and hold them deep into the cycle.

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Finisar Has Room To Run On Data Center And Telecom Upgrades

Investopedia: Agilent Grinding Through Challenging Market Conditions

It may not look like it on the basis of the last few quarters, but Agilent (NYSE:A) is getting better. Weakness in multiple test and measurement end-markets and lower government spending are generating stiff headwinds, but the company continues to roll out strong new products, and the long-term potential in chemical analysis and diagnostics remains impressive. Even though Agilent is near a 52-week high, I believe shareholders could still do reasonably well with this stock, particularly if their investment horizon is more than just a quarter or two.

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http://www.investopedia.com/stock-analysis/081513/agilent-grinding-through-challenging-market-conditions-dhr-tmo-jdsu.aspx

Investopedia: JDSU's Results Highlight The Volatility Of The Telco Capex Recovery

Happy days are here again in the telecom capex market, right? After all, companies like Juniper (Nasdaq:JNPR), Ciena (Nasdaq:CIEN), and Finisar (Nasdaq:FNSR) have seen their stocks shoot up over the last three months, and even Alcatel-Lucent (NYSE:ALU) is looking viable again. Certainly if Alcatel looks like it could make it, the market must be improving, right?

Well, yes and no. Spending is still lumpy and idiosyncratic, and there are gaps between what companies are saying about orders (and what analysts/investors are projecting for 2013/2014) and what's actually happening in the here and now. And that's where JDSU's (Nasdaq:JDSU) earnings come into play – JDSU didn't have a bad quarter and management sounds optimistic about the recovery, but the actual business still needs time to come around. Of course, those investors who think they can just wait until they see the recovery in the financials before they buy the shares may well find that most of the gains have already gone to others by then.

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Investopedia: Finisar Perking Up On Datacom, With Telecom (Hopefully) On The Way

With Cisco (Nasdaq: CSCO), Juniper (Nasdaq:JNPR), and Ciena (Nasdaq:CIEN) all having decent enough recent quarterly reports, things were set up for Finisar (Nasdaq:FNSR) to do pretty well this quarter. Luckily, the company delivered, as strong datacom sales offset ongoing weakness in telecom. There is plenty of controversy around this name – ranging from customers self-sourcing components to the threat of silicon photonics – but the current stock price doesn't appear to capture all of the potential over the next two or three years.

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Investopedia: EXFO Testing Patience

It's important to remember that there are multiple definitions of success out there. Some companies have very successful products, but that doesn't always translate into impressive financial results or outsized stock market performance. Although EXFO (Nasdaq:EXFO) has been quite successful in terms of market and technology leadership in the communications testing business, management has never really translated that success into impressive financial results.

More of the same in Fiscal Second Quarter
Performance has been tough at EXFO for a while now, as major carriers like Verizon (NYSE:VZ) and AT&T (NYSE:T) delay capital spending on their networks. Although EXFO had established a recent string of squeaking by the quarterly expectations but lowering forward looking numbers, this quarter featured both a miss and yet another takedown of guidance.

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Investopedia: A Pause In Electronic Test Gives Investors Another Chance With Agilent

It is impossible to follow every good stock out there and missing good opportunities is just part and parcel of being an investor. That said, investors should always be on the lookout for a second crack at good companies. With Agilent (NYSE:A) suffering a bit from a temporary slowdown in telecom infrastructure equipment, investors may have the opportunity again to buy shares in an excellent company at an appealing price.

Fiscal First Quarter Results a Bit Disappointing  
For the most part, Agilent had a good quarter but it seems more likely that the Street is going to focus most of its attention on what didn't go so well. Revenue was up about 7% as reported and more than 6% on an organic basis - below the low end of management's prior guidance range.

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Investopedia: JDSU Still Predictably Unpredictable

When I last wrote on JDSU (Nasdaq:JDSU) about a year ago, I pointed out that there were encouraging signs across the business, and that if this historically boom/bust company could show some consistency the stock could perform well. Flash forward one year: severe flooding did real harm to a contract manufacturer; weak carrier spending rippled through equipment providers; and just about everybody started to worry about the sustainability of tech hardware spending.

A Good Quarter, But ... 

JDSU actually had a surprisingly strong fiscal second quarter. Operations in Thailand recovered faster than anticipated and the company's sequential revenue decline of 2% was considerably better than Street analysts had predicted. Still, it was a tough quarter. Test revenue did rise almost 6% from the preceding quarter, but optical components and advanced technologies both saw declines (nearly 10 and 3%, respectively).

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