Tech Advisory: JDS Uniphase: A Bull Market of its Own (JDSU)
Wednesday, October 13, 1999
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October 13, 1999 -- Strong growth stocks that do not give up ground during market thunderstorms are likely to outperform going forward, according to momentum advisor Carlton Lutts. Illustrating this point is JD Uniphase (JDSU). "Look at the price chart and note that the stock just doesn't know how to turn weak for more than a few days," he says. He says that while the Dow gyrates, JDS Uniphase is "in a bull market of its own."
JDS Uniphase makes advanced fiber optic components and laser systems and are a compelling play on the telecom, fiber optic and Internet infrastructure arenas. The company's high-margin products are expensive, but the companies that use them save a great deal of money as they dramatically increase a system's bandwidth. "There is no company in the component area with the scale and bandwidth of its product line, and it is one of the few pure ways to play fiber optics outside of the service providers," Lutts says.
Growing sales bear out Lutts' optimism; sales rose 43%, 40%, 55% and 68% in the past four quarters. Earnings growth is also compelling, growing 11%, 36%, 25% and 47% over the past four quarters. Profit margins are also gaining and the firm has no debt. Lutts also points out the JDS Uniphase has plenty of room to grow as it is still a small company with sales of just $283 million. He maintains a buy recommendation on JDS Uniphase.
For more on Carlton Lutts' advice see "A Bull Market of its Own," September 30, 1999, The Cabot Market Letter. Growth stock investor Carlton Lutts uses fundamental analysis and looks for upward market trends and positive stock momentum to identify tomorrow's superstars before their share prices soar. Lutts earned a 25% average annual return for the past three years and 26% for the past five years according to Hulbert Financial Digest, the independent newsletter tracking service.
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