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To: drsvelte who wrote (21868)	7/5/1999 12:22:00 PM
From: Clint E.	Respond to of 69866

Thanks for your read on OCLI, Doc. I noticed that it was also mentioned in Harry's article on Optical Networking stocks. As the demand for broadband access increases, cable companies are forced to upgrade their HFI(Hybrid Fiber/Coax) networks and deploy fiber closer to the subscriber and increase the amount of fiber optic equipment in a cable network. ETEK also came up in my 061799_IBD_Scan but they make "passive" components where margins are thiner. Found this on yhoo as well. ======================= Stock of the Day Jul 02, 1999 OCLI: Out of the Lab, Into the Stratosphere Optical Coating Laboratory (Nasdaq:OCLI - news) is not exactly a household name, but its optical thin film coatings are increasingly finding their way into our lives. These coatings are used to "manage" light for applications such as fiber optic telecom, computer monitors/flat panel displays, copiers and fax machines. OCLI's stock has come blistering out of the small-cap shadows, from the mid-teens last year to over $80 currently. We just wrote about OCLI in May, but notably the stock has advanced another ten points despite a secondary stock offering that increased outstanding shares by 11%. OCLI raised $90 million in that secondary offering. The stock has also picked up coverage by two more analysts since then, bringing the total to six. What has OCLI done to get noticed? In the past two quarters, the company has delivered earnings that were on average 24% above the consensus. Big positive earnings surprises are a good way to get attention from Wall Street. It also helped that the soaring share price and follow-on stock offering have lifted OCLI's market capitalization past the $1 billion mark. It doesn't hurt to have a compelling story to go with the numbers, and Optical Coating Lab has that. By altering the various wavelengths of light, OCLI's products control and enhance light to achieve reflection, refraction, absorption, abrasion resistance, anti-glare and electrical conductivity. OCLI is involved in some pretty exciting growth areas, particularly telecom infrastructure where there is a huge buildout occurring to support exploding demand for data, voice and video communications. OCLI makes bandwidth expanding products for fiber-optic networks, specifically Dense Wavelength Division Multiplexing (DWDM) components. In its display products lineup, OCLI makes anti-glare glass panels for CRT displays, anti-reflective coatings on flat panel displays, and GlareGuard® brand anti-glare, anti-radiaton filters for computer displays. The market for its coating products here should remain strong as PC prices fall but unit shipments continue to grow. Other interesting applications come from OCLI's wholly-owned subsidiary, Flex Products. Flex makes thin-film coatings applied to flexible surface, including solar film for windows and laser absorbing films for printed circuit applications. It also developed the pigment used on US currency for anti-counterfeiting, so when you view a bill at different angles the pigment reflects different colors. The Flex division is expected to be running at full capacity this year, so OCLI is planning a $14 million expansion of production facilities. These light-bending products are fascinating and, more importantly, catering to some fast-growing markets. But with the stock soaring from $15 eight months ago to $81.75 currently, the common credo of "value in small caps" no longer applies here. OCLI is trading at 68 times trailing earnings ($1.20 per share) and about 3.7 times sales. The forward P/E is 49 using FY2000 estimates (OCLI's fiscal year ends in October). For a company expected to grow at roughly 30% going forward, this stock is not cheap. But some investors prefer to focus on earnings and price momentum, as well as association with hot industries. The stock tables in Investor's Business Daily show OCLI has an EPS rating of 90 and Relative Price Strength of 99 (the highest possible). The companies involvement with fiber-optic communications, a red-hot industry, is another attractive characteristic. As dazzling as this company's performance and products are, investors need to be careful not to get "blinded by the light." - James Hale theonlineinvestor.com