AAOI vs ESIO
Which one is better right now for making money ? Well nothing wrong with owning both, except for the fact that ESIO for now is not acting like it wants to go past $26.50, even after what most would find unbelievable news of huge growth for the next 3 qtrs. To me, using the same valuation as in the past, this news should have sent the stock to the upper $20s by now. I was floored watching ESIO open above $27 on Thursday, only to tank to $25, and end the day $26.30. Then to add insult to injury, the stock traded between the high $25s and $27 Friday, only to end the day at $26.44. In other words, investors sold off ESIO on both Thursday and Friday after the initial gain of around $5 on the news. Volume on both days was several times normal.
Contrast this with almost non news on AAOI, that they are coming out with their earnings report for the Dec qtr in mid Feb. However AAOI reacted by opening at $34.60, but slowly went up to $35.02 at the close. Point is though, AAOI didn't end the day lower than where it started. Also after hours, the stock was up another 1% or so. So what does this mean ?
To me this means investors feel like AAOI is well undervalued, while ESIO is at or near full valued. Now how is that possible if ESIO using the new EPS/qtr based on the $24M increase in revenues, would be worth $35 ? Only one answer at this point- Investors feel the recent up cycle with ESIO will likely end with this latest news. At least that's how I interpreted it. Therefore I sold ESIO and bought AAOI. So far I'm up 2% on AAOI in one session, and I made about 1% on ESIO in two sessions. I have no reservations though about taking another shot with ESIO, depending on the stock action.
AI
