Finisar Corporation (FNSR): One Stock That Should Help You Beat the Market

As I’d pointed out in my preview of Finisar’s earnings, terrific results from optical networker Ciena Corporation (NASDAQ:CIEN) earlier this month indicated that telecom spending is still up and running and should get better going forward. Like Finisar, even Ciena Corporation (NASDAQ:CIEN)’s guidance was stellar as the company is well-positioned to benefit from network infrastructure upgrades by telecom carriers.

Since Ciena counts the likes of AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and other telco customers, it means that these companies are investing capital to roll out faster networks and this is good news for Finisar. Moreover, Ciena Corporation (NASDAQ:CIEN) had stated that it is looking to gain from the multi-year upgrade cycle in telecom and this indicates a brighter future for companies involved in fiber-optics such as Finisar.

Finisar Corporation (NASDAQ:FNSR) has made some product development moves in the telecom side of its business to benefit from the roll out of faster networks and its cost-effective 100G solution has found traction in the market. Finisar is also expecting higher telecom spending in the second half of the year and is looking at overall revenue in excess of $1 billion for the current fiscal year, a jump of 10%-15% over the recently-concluded fiscal 2013.

The expected revenue growth is impressive given the fact that Finisar’s revenue had declined in the previous fiscal year to the tune of almost 2%, and a growth in telecom revenue will be a major driver of this growth.

The bottom line

It’s evident that there’s opportunity for Finisar to grow and the company is looking to tap this opportunity by innovating and making its products better. The optimism reflects in the company’s own outlook and analyst estimates, which put the company’s earnings growth rate at a commendable 61% for this year and 22% for next year.

Moreover, with a forward earnings multiple of 13 times and a balance sheet without any debt and ample cash, I think Finisar Corporation (NASDAQ:FNSR) is a good deal right now.

The article 1 Stock That Should Help You Beat the Market originally appeared on Fool.com and is written by Harsh Chauhan.

Harsh Chauhan has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems (NASDAQ:CSCO). Harsh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.