Core Insights - In 2026, investors are expected to prioritize companies with consistent earnings growth, as this indicates profitability, but earnings acceleration is even more critical for driving stock prices higher [1][8] - Research shows that top-performing stocks often experience earnings acceleration before their share prices rise [1] Earnings Acceleration - Earnings acceleration refers to the incremental growth in a company's earnings per share (EPS), specifically when the quarter-over-quarter earnings growth rate increases over time [2] - This metric helps identify stocks that have not yet attracted investor attention, which can lead to a price rally once they are recognized [3] Earnings Growth Trends - An increasing percentage of earnings growth suggests a company is fundamentally sound, while a stagnant or decelerating growth percentage may indicate consolidation or a slowdown, potentially dragging prices down [4] Screening Parameters - Stocks should be screened based on the last two quarter-over-quarter EPS growth rates exceeding previous periods' growth rates, with projected EPS growth rates for the upcoming quarter expected to surpass prior periods [5][6] - Additional criteria include a current price of at least $5 and an average 20-day trading volume of 50,000 or more to ensure adequate liquidity [7] Top Stocks Identified - Screening for accelerating EPS growth narrowed the universe of approximately 7,735 stocks to just 11, with Silicon Laboratories Inc. (SLAB), Patria Investments Limited (PAX), and Fabrinet (FN) leading the list [8] - Expected earnings growth rates for 2026 are 197.8% for SLAB, 22.8% for PAX, and 16.1% for FN [8][9][10][11]

Core Viewpoint - Fabrinet (NYSE:FN) is highlighted as a promising investment in the AI sector, with a "Positive" rating and a price target of $550 set by Susquehanna, indicating strong potential in the optical networking market driven by infrastructure and AI trends [1][3]. Group 1: Company Positioning - Fabrinet is well-positioned in the optical networking market, benefiting from the growth in transceivers, Data Center Interconnect (DCI), and Co-Packaged Optics (CPO) technologies [2][3]. - The company has significantly benefited from the increasing demand for transceivers in data centers and is expected to capitalize on further opportunities in optical networking and high-performance computing (HPC) contract manufacturing for AI servers [3]. Group 2: Market Outlook - The firm anticipates that Fabrinet will leverage expanding opportunities in optical networking, which includes various technologies that are critical for the growth of AI infrastructure [2][3].

We came across a bullish thesis on Fabrinet on Make Money, Make Time’s Substack by Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on FN. Fabrinet's share was trading at $451.16 as of December 16th. FN’s trailing P/E was 48.46 according to Yahoo Finance. Qnity Electronics (Q) is Exactly What You Want in This Market, Says Jim Cramer electronics-6055226_1280 Fabrinet (FN) is a leading outsourced semiconductor assembly and test (OSAT) provider specializing in packaging and testin ...

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Group 1 - Susquehanna initiated coverage of Fabrinet (FN) with a Positive rating and a price target of $550, highlighting its benefits from the inflection of transceivers in data centers and opportunities in optical networking and AI server contract manufacturing [1] - Evercore ISI initiated coverage of Rockwell Automation (ROK) with an In Line rating and a price target of $440, noting that multi-industrials provide leverage to strong underlying cycles, with expectations of outperformance in 2026 [1] - Macquarie initiated coverage of Pony AI (PONY) with an Outperform rating and a price target of $29, stating that Pony is at the forefront of robotaxi commercialization in China [1] Group 2 - Goldman Sachs initiated coverage of SiTime (SITM) with a Buy rating and a price target of $420, recognizing it as the leading provider of silicon-based precision timing solutions and the only scaled pure-play MEMS timing company benefiting from the shift away from quartz [1] - William Blair initiated coverage of RealReal (REAL) with an Outperform rating, viewing the resale market as a significant emerging trend in retail [1] - Evercore also started coverage of Honeywell (HON) and GE Vernova (GEV) with Outperform ratings, indicating positive outlooks for these companies [1]

Industry Overview - Artificial intelligence is entering a new phase of infrastructure expansion, with photonics as a key technology enabling this growth [1] - Optical interconnects, silicon photonics, and co-packaged optics are essential for boosting bandwidth, reducing latency, and lowering power consumption in next-generation data centers [2] - The market for optical interconnects is projected to grow from approximately $16 billion in 2024 to between $34 billion and $41 billion by 2030 [3] Company Insights - Lumentum manufactures critical optical components for AI data centers and has seen accelerating sales and earnings growth, earning a Zacks Rank 1 (Strong Buy) [7][8] - Coherent Corp produces lasers and optical components for AI data centers and has a Zacks Rank 1, with strong sales and earnings momentum [10][11] - Fabrinet specializes in the assembly of optical and photonic components and has a Zacks Rank 2 (Buy), benefiting from rising demand for high-speed optical modules [14][16] Financial Performance - Lumentum's revenue is projected to climb 56% this year and 31.4% next year, with earnings expected to surge 163% year over year [9] - Coherent Corp's sales are expected to grow 15.1% this year and 14.5% next year, with earnings projected to rise 44.5% and 24.6% over the same periods [11] - Fabrinet's sales are expected to increase 28.5% this year and 16.9% next year, with earnings projected to grow 30.7% and 16.1% over the same periods [17] Market Trends - Investors are beginning to rotate into the photonics industry, with strong performance observed in stocks related to this sector [5] - The shift towards optical technologies in AI infrastructure is gaining attention, indicating a potential multi-year demand tailwind for companies like Lumentum, Coherent, and Fabrinet [20][21]

Core Insights - Susquehanna initiated coverage of Fabrinet (FN) with a Positive rating and a price target of $550, highlighting its benefits from the transceiver market in data centers and opportunities in optical networking and AI server contract manufacturing [1] - Evercore ISI initiated coverage of Rockwell Automation (ROK) with an In Line rating and a price target of $440, emphasizing the multi-industrials' leverage to strong underlying cycles and expected market outperformance in 2026 [1] - Macquarie initiated coverage of Pony AI (PONY) with an Outperform rating and a price target of $29, noting its leadership in robotaxi commercialization in China [1] - Goldman Sachs initiated coverage of SiTime (SITM) with a Buy rating and a price target of $420, recognizing it as a leading provider of silicon-based precision timing solutions [1] Company Summaries - **Fabrinet (FN)**: Positive rating with a $550 price target; benefits from data center transceivers and optical networking opportunities [1] - **Rockwell Automation (ROK)**: In Line rating with a $440 price target; multi-industrials expected to outperform in 2026 [1] - **Pony AI (PONY)**: Outperform rating with a $29 price target; forefront of robotaxi commercialization in China [1] - **SiTime (SITM)**: Buy rating with a $420 price target; leading provider of silicon-based precision timing solutions [1] - **Macom (MTSI)**: Neutral rating initiated [1] - **Honeywell (HON)** and **GE Vernova (GEV)**: Outperform ratings initiated [1] - **RealReal (REAL)**: Outperform rating initiated; resale market viewed as a significant emerging trend in retail [1]

Wasatch Global Investors, an asset management company, released its third-quarter 2025 “Wasatch Small Cap Growth Strategy” investor letter. A copy of the letter can be downloaded here. US small-cap equities rallied strongly in the third quarter. The Fed Reserve’s interest rate cut supported the rally. However, the fund-Investor Class struggled to keep up with the rally and ended the period down -3.17% vs. 12.19% gain for the Russell 2000 Growth Index. In addition, please check the fund’s top five holdings t ...

Core Insights - Fabrinet is positioned in a rapidly growing sector, particularly in telecom and data center interconnect (DCI) markets [1] Group 1: Growth Areas - Fabrinet has recently started breaking out its telecom and DCI segments, allowing for better visibility into growth drivers [1] - The company is experiencing strong growth in specific products and solutions within these segments [1] Group 2: Customer Base - Fabrinet's customer base is diverse, contributing to the robust growth in its telecom and DCI sectors [1] - Key customers are driving the strong growth, indicating a healthy demand for Fabrinet's offerings [1]

Summary of Conference Call Company Overview - The conference call features Fabrinet, a company involved in IT hardware and communications equipment, with a focus on optical and transceiver manufacturing. Key Industry Insights Telecom and Data Center Interconnect (DCI) - Fabrinet has recently separated DCI from its telecom reporting to provide clearer visibility on growth, driven primarily by the Datacom sector [4][14] - DCI products, particularly 400ZR and 800ZR, are experiencing strong growth, with five main customers contributing to this segment [4][5] - The demand for DCI is robust, with expectations for sustainable growth over the coming years [15][14] - Traditional telecom business is growing but at a more stable rate compared to the exponential growth seen in DCI [20][24] High-Performance Computing (HPC) - Fabrinet has initiated a new HPC category, primarily serving AWS, with a revenue of $15 million from qualification volumes [28][30] - The company aims to establish a cost-competitive solution in the HPC market, with potential for significant growth [31][30] - The HPC business is expected to ramp up, with plans for additional product offerings beyond PCBAs [100][105] Capacity Expansion - Fabrinet is constructing Building 10, which will add $2.5 billion in revenue capacity, with a current run rate of $4.5 billion [39][40] - The new facility will be flexible, allowing for quick repurposing based on customer needs [41][44] - The capital expenditure for Building 10 is approximately $130 million, funded from existing cash reserves [45][46] Datacom Demand - Demand for transceivers in the Datacom sector is described as insatiable, particularly with the rise of AI data centers [69][70] - Fabrinet is producing advanced transceivers (200G, 800G, and 1.6T) but faces component shortages that limit production capacity [71][73] - The company is exploring opportunities with various customers, including traditional companies and hyperscalers [78][79] Automotive Sector - Fabrinet's automotive business is stable, with growth in EV charging infrastructure and LiDAR technology [94][95] - The company has captured a significant share of the LiDAR market, positioning itself for future growth as the technology gains traction [95] Financial Performance and Strategy - Fabrinet aims for a gross margin range of 12.5%-13%, with low operating expenses around 1.6%-1.7% of revenue [93][94] - The company has a strong financial position with no debt and approximately $1 billion in cash, allowing for self-funded growth [45][46] - Fabrinet's growth strategy focuses on maintaining a compound annual growth rate of 16% over the past decade, with plans to continue this trend [130][130] Additional Considerations - The company emphasizes the importance of performance and customer satisfaction in securing additional business opportunities [106][107] - Fabrinet is committed to long-term planning, utilizing an eight-quarter rolling revenue forecast to guide its growth strategy [129][130] - The company is open to diversifying its product offerings beyond optical solutions, depending on customer demand [85][86]