Waiting for a turnaround
JDS Uniphase Corp (NASDAQ:JDSU) did better in Q2, but the stock’s performance has been disappointing on the whole when you consider that it had begun the year with flamboyance. However, the wheels came off in May when JDS Uniphase Corp (NASDAQ:JDSU) failed to satisfy the Street with its outlook and also missed estimates in the third-quarter.
However, management stated that it was more of a case of bad timing as a holdup by carriers in releasing their budgets led the company to miss out on some sales in the quarter and led it to issue a cautious guidance. I’ll give the company the benefit of doubt as its order book remained strong in the quarter with a book-to-bill ratio of more than 1, and as such, I believe that it can turn its fortunes around when it posts earnings next month.
JDS Uniphase Corp (NASDAQ:JDSU) is looking east for growth, as it expects deployment of 100G by an important Chinese telecom company. Its relationship with Huawei should stand it in good stead since Huawei counts several telcos in Asia as customers. In addition, JDS Uniphase Corp (NASDAQ:JDSU) is also aggressively focused on product development and its new products have accounted for more than 50% of its core network-related revenue in the last two years.
So, even though JDS Uniphase Corp (NASDAQ:JDSU)’s returns haven’t been very spectacular, it does have the potential to turn around and appreciate further.
Steady and solid
Xilinx has been a consistent performer this year and its 12% gain in the first half of 2013 is pretty satisfying. It has a diversified business spanning communications and data center, industrial, aerospace & defense, and broadcast, consumer & automotive among others, to whom it supplies programmable chips.
The company is a dividend payer as well, yielding 2.50%, and these are the reasons why I’d recommended Xilinx in the first place since it is stable and solid. The company has a number of things going for it and I’ll focus on them in greater detail in an earnings preview next week before Xilinx releases its results. So, keep an eye on this space to see why I believe Xilinx has the potential to continue its steady ascent.
The takeaway
I’d rounded off my Q1 review saying that Ciena Corporation (NASDAQ:CIEN), Finisar Corporation (NASDAQ:FNSR), and JDS Uniphase Corp (NASDAQ:JDSU) were struck by bad luck, but much of that bad luck turned into good for Ciena and Finisar in Q2. Uniphase still needs to get off the blocks and I think that it would do so in due course of time, while for the others; the good times look set to continue.
The article These Stocks Stepped on the Gas in Q2 and Should Get Better originally appeared on Fool.com and is written by Harsh Chauhan.
Harsh Chauhan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Harsh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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