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  (MIKE SEGAR/REUTERS)

 

(MIKE SEGAR/REUTERS)

Research Report

Why buy Alliance Fiber? Strong returns, reasonable price Add to ...

Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.

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California-based Alliance Fiber Optic Products Inc. makes high performance fiber optic components and integrated modules for the optical network equipment market. Its products enable communications equipment manufacturers to deliver optical networking systems to the rapidly growing long-haul, metropolitan and last-mile access segments of the communications network. It has a $280-million (U.S.) market cap.

The company has grown EPS at a 45-per-cent pace over the long term (using the average of the three-, four- and five-year EPS growth rates), impressing both the Main Zweig- and Peter Lynch-based models.

Alliance grew earnings at a 200-per-cent pace and sales at an 86-per-cent pace last quarter, which the Motley Fool-based model likes.

The company has a 92 relative strength over the past year, which the Fool-based model also likes.

It also has a 24-per-cent return on equity.

Sales growth accelerated last quarter to 86 per cent (from 65 per cent), which the Zweig-based model likes.

It has a 3.92 current ratio, which the Benjamin Graham-based model likes, and a reasonable 16 P/E ratio. It has a 0.36 PE-to-growth ratio, a big reason why the Peter Lynch-based model has strong interest in the stock.

The company has no long-term debt.

Click here for a complete breakdown of Validea's investing guru report.

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