AAOI
First of all are we at the peak of the cycle. if we are which I personally believe we are or close too, that is when pe going foward look the cheapest in the sector, because you're buying peak earnings or at least close to it.
Secondly, the stock has run and amazing amount and has doubled in the last 3 months even with the pullback it has had. so lets not make it like the stock pullback is unreal it up huge, and has ran many times itself in the last year.
Thirdly the company was wildly overbought on a MACD level, it has finally corrected this. It is not exactly oversold, and one can definetly argue it will at least close the earnings gap (42.5), if not the gap at $37-38 before this pullback is over in my opinion.
Fourth, I wouldn't want to hold this thing into earning, I'm concerned q2 guidance will be significantly lower then q1, and that could spark a selloff as well.
Fifth there might be a good trade in there though to either have the stock run in the very low 40's or perhaps upper 30's to like upper 40's or perhaps low 50's before earnings that is probably the smart exit point, I think you get another good bounce to sell without having to take the risk of the earnings holding, but it might go a little lower first. Keep in mind this sector get a higher pe in the beginning of the growth stages then the late stages of growth which most of us would probably believe we are close to or are in. Hence the stock is probably worth upper 40's low 50's right now and might be worth less assuming q2 earnings drop off significantly from q1 levels. So at 43.50 it is not exactly a screaming buy here, it may have like 10-15% upside that's it in my opinion. All is just my opinion, and I could always be wrong though.
AI
