Finisar Is the Best Turnaround Company Someone Else May Buy

NEW YORK (TheStreet) -- Optical components manufacturer Finisar (FNSR) continues to be one of the best turnaround candidates on the market.

Despite threats from telecommunication and data communication rivals like JDS Uniphase (JDSU) and Avago Technologies (AVGO), Finisar's strong product portfolio has spurred widespread demand from, among others, AT&T (T), which relies on Finisar's components to build out its high-speed LTE networks.

Finisar's product differentiation continues to be a strong advantage, culminating in a March quarter that delivered year-over-year revenue and profit gains of 23.4% and 175%, respectively. Its shares closed Tuesday around $25, up 4.5% for the year to date.

Not only has Finisar gained meaningful market share, management has now shown -- on a consistent basis -- it can convert Finisar's product advantage into significant free cash flow. With that in mind, investors would be wise to get in on the action now before another company -- say, Cisco (CSCO) -- decides to buy it.

With better-than-expected results coming out from Ciena (CIEN) and Cisco, it looks as if carriers and telecoms are opening their wallets, which bodes well for Finisar's future.

On Thursday, the Street will be looking for 38 cents in earnings per share on revenue of $303.92 million, representing a year-over-year earnings and revenue increases of 90% and 25%, respectively. These are not typos. Very few companies within the optical equipment space have performed as well as Finisar in the past two quarters.

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