10 Small-Cap Stocks Jim Cramer is Talking About Amid Latest Market Rotation

2. Fabrinet (NYSE:FN)

Number of Hedge Fund Investors: 33

Fabrinet (NYSE:FN) provides advanced optical, electro-mechanical, and electronic manufacturing services. Cramer said the stock jumped after the latest CPI numbers but it has since pared gains. That, according to Cramer, “makes sense” since it’s an outsourcing company and the latest rotation is about the “end of outsourcing.”

Fabrinet (NYSE:FN)  makes low volume highly complex products that are unfeasible to produce in-house for OEMs.  Its products are used in key industries like automotive and data centers. Fabrinet (NYSE:FN) is a notable player in the optical communication equipment market that is slated to grow at a CAGR of 8.7%.

Fabrinet (NYSE:FN) saw strong revenue growth in the latest quarter amid demand for data communication products.

FPA Queens Road Small Cap Value Fund stated the following regarding Fabrinet (NYSE:FN) in its first quarter 2024 investor letter:

“Fabrinet (NYSE:FN) is a contract manufacturer of components and modules. The company has a dominant position in hard-to-replicate precision-manufacturing technologies and an enviable track record of execution. The majority of Fabrinet’s sales are to networking equipment manufacturers but it has been successfully diversifying into the data center, industrial, auto, and medical end-markets. FN’s stock jumped after reporting June 2023 earnings – datacenter sales increased 50% sequentially and more than 100% over the previous year, driven by their 800-gigabyte transceivers for Artificial Intelligence applications. The company also announced that Nvidia is a 10%+ customer.

Fabrinet was a top-five holding in the Fund before its June 2023 earnings announcement. Since then, the stock has appreciated considerably and we have trimmed in keeping with our risk management policies. Given the growth in its forward earnings estimates, Fabrinet trades in line with its historical earnings multiples and remains a top five position for us.”