Stock of the Week
Applied Optoelectronics (AAOI)

Applied Optoelectronics designs and makes fiber-optic networking components embedded in communications equipment used by cable-TV providers, broadband network providers, and Internet data centers to enable faster network connections. Those components include laser chips, subassemblies, and modules using the company’s proprietary fabrication process. The company’s customers include Aurora Networks, Cisco Systems, Harmonic, and Motorola.

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Significant Developments

U.S. Stocks in Danger for another Sharp Pullback

May 24, 2017 (9:40 am U.S. Eastern Time)

Our research indicates that U.S. stock prices, in general, are in danger of another sharp pullback within the next few days, with stock market participants ignoring some major warning signs, such as a weakening in the U.S. housing and manufacturing markets. Therefore, we’re advising our clients and subscribers to allocate a substantial portion of their financial market assets to cash until signs emerge that the U.S. Congress will implement President Trump’s economic proposals.

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Frazier's Investment-Timing Recommendations
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U.S. Economic Developments

U.S. Existing Home Sales Decline during April

May 24, 2017

In another sign that economic activity in the U.S. housing market is slowing, the National Association of Realtors (“NAR”) reported this morning that sales of previously-owned homes in the United States – existing home sales – declined during April.

Specifically, the NAR reported that existing home sales declined, on a seasonally-adjusted basis, by 2.3% during April, as compared to the prior month, as the median price of existing homes rose for the third consecutive month. Continue reading >

  U.S. Existing Home Sales
U.S. Political Developments

President Trump Signs Memorandum to Study the Effects of Excessive Steel Imports

April 20, 2017

President Trump signed a memorandum today directing the U.S. Secretary of Commerce to investigate the effects of excessive steel imports into the United States and to recommend actions that should be taken to adjust the amount of steel imports if such imports threaten the national security of the United States.

Separately, President Trump's budget director Mick Mulvaney said the Trump administration plans to include $200 billion for new infrastructure spending in its fiscal year 2018 budget. According to Mulvaney, that would be enough money to fund $1 trillion worth of infrastructure projects.

 
Earnings Announcements

AutoZone, Cracker Barrel, Diana Shipping, DSW, Kirklands and Toll Brothers Report Q1 2017 Earnings

May 23, 2017

AutoZone (AZO) reported that its net income before income taxes declined by 1.7% on a 1% increase in the company’s revenues, a 1.4% increase in its cost of goods sold and a 1.9% increase in its operating expenses for the twelve weeks ended May 6, 2017, as compared to the same period a year ago.

Cracker Barrel (CBRL) reported that its net income declined by 4.6% on a 0% change in the company’s revenues, a 3.1% decrease in its cost of goods sold and a 0.5% increase in its operating expenses for the three months ... continue reading >

Click Here for All Q1 2017 Earnings

International Economic Developments

Eurozone and Japan Manufacturing Activity Continues to Increase

May 23, 2017

IHS Markit reported today that its latest survey of purchasing managers at manufacturing companies in the Eurozone and Japan indicates that manufacturing activity in those regions continued to increase during the first half of May.

Specifically, Markit reported that its survey of manufacturing executives in the Eurozone indicates that manufacturing activity in that region of the world rose ... continue reading >

 
International Geopolitical Developments

China Installs Rocket Launchers on Disputed South China Sea Island

May 17, 2017

Reuters reported today that China installed rocket launchers on a disputed reef in the South China Sea that it, the Philippines, Vietnam and Taiwan claim as legal territory in response, reportedly, to Vietnamese divers installing larger numbers of fishing nets in the area.

According to Reuters, approximately $5 trillion of products per year is shipped through waterways in that region of the world.

Company and Stock News
May 23, 2017
  • Sears Holdings (SHLD): Sears Holdings announced today that it entered into agreements to extend a portion of the company’s $500 million 2016 Secured Loan Facility and to annuitize $515 million of its pension obligations. Specifically, the company signed an agreement to repay $100 million of its $500 million 2016 Secured Loan Facility on its original maturity date during July 2017 and to extend the maturity of the remainder of the loan until January 2018. Additionally, the company signed an agreement with Metropolitan Life Insurance Company, whereby Metropolitan Life will pay future pension benefit payments to approximately 51,000 of Sears’ retirees.

  • JetBlue (JBLU): JetBlue Airways Corporation reported that the company increased its projections for its revenues per available seat miles for the quarter ending June 30, 2017 to an estimated increase of 4%-6%, as compared to the same period a year ago, from an earlier estimate of 3%-6%.

  • Amazon (AMZN): Amazon.com announced that it introduced a new service named Wedding Shop from Handmade at Amazon, where people planning weddings can select thousands of handcrafted products, including personalized wedding invitations, wedding decorations, guestbooks and jewelry.

  • Wal-Mart (WMT): MarketWatch reported that Wal-Mart Stores, Inc. announced that it will open nine new stores and create 800 jobs in Florida.

  • Apple (AAPL) and Nokia (NOK): Apple Inc. and Nokia Corporation announced that the company’s settled all litigation related to their intellectual property dispute and agreed to a multi-year patent license. Under the terms of the license agreement, Nokia will provide network infrastructure products and services to Apple and Apple will resume carrying Nokia’s digital health products in its retail and online stores.

More Company and Stock News >

Stock Recommendations

GROWTH STOCKS

Company & Ticker Sector / Industry Frazier Grade Initial Coverage Date & Price Rating on Initial Coverage Date
Product Financial Liquidity Long-term Debt Profit Margins Sales & EPS Growth PEG Ratio Institution Buys to Sells Timing
Semiconductor Manufacturing International (SMI) Technology B+ A+ B+ B+ A

04/10/17
0.6

C A

04/10/17
$6.18

A
Semiconductor Manufacturing International Corporation provides contract manufacturing services to semiconductor design companies. The company operates seven factories in China and manages two manufacturing facilities owned by the Chinese government. Approximately 50% of the company’s revenues are generated from sales in the United States.
 
Solar Edge Technologies (SEDG) Energy A A+ A A A

12/23/16
0.7

A A

12/23/16
$12.65

A
SolarEdge Technologies manufactures solar photovoltaic (“PV”) systems that maximize power generation and lower the cost of energy produced by those systems. The company’s products serve a wide variety of solar market segments, from residential solar installations to commercial and small utility-scale solar installations. Its products have been installed in solar PV systems in more than 70 countries around the world.
 
Qualys (QLYS) Technology  A A+ A+ B+ A

11/28/16
2.3

C C

11/28/16
$33.75

C
Qualys is a leading provider of cloud-based security and compliance applications that enable organizations to identify security risks to their IT infrastructures, to protect their IT systems and applications from ever-evolving cyber attacks, and to achieve compliance with internal policies and external regulations. The company’s integrated suite of security and compliance applications, delivered on its QualysGuard Cloud Platform, enables its customers to identify their IT assets, collect and analyze large amounts of IT security data, discover and prioritize vulnerabilities, recommend remediation actions and verify the implementation of such actions. The company provides its applications through a software-as-a-service model, primarily with renewable annual subscriptions. Those subscriptions require customers to pay a fee to access the company’s cloud-based applications. The company has approximately 8,800 customers in approximately 100 countries around the world, including a majority of each of the Forbes Global 100 and Fortune 100 companies.

TURNAROUND SITUATIONS

Company & Ticker Sector / Industry Frazier Grade Initial Coverage Date & Price Rating on Initial Coverage Date
Product Financial Liquidity Long-term Debt Profit Margins Sales & EPS Growth PEG Ratio Institution Buys to Sells Timing
Sears Holdings (SHLD) Consumer Discretionary B B D+ n/a F n/a A A

02/22/17
$8.06

A
Sears Holdings is the world’s 31st largest retailer, operating more than 1,600 Sears and Kmart stores in the United States and Canada. The company is the leading U.S. retailer of home appliances, tools, lawn and garden goods, fitness equipment and automotive repair services, and it’s the nation's largest provider of home services, with nearly 12 million service and installation calls made annually.
 
Cliffs Natural Resources (CLF) Basic Materials A A- F n/a D n/a C A

01/13/17
$9.23

A
Cliffs Natural Resources produces iron ore pellets, a key component of steel making, and owns or holds stakes in five iron ore properties that account for more than half of the United States’ total iron ore production capacity. While the company sells its ore primarily in North America, it has a growing number of iron ore interests in the Asia/Pacific region and in Latin America.
 
Lumber Liquidators (LL) Consumer Discretionary  A B A n/a D n/a C B+

01/12/17
$15.47

B+
Lumber Liquidators is one of the larger retailers of hardwood flooring in the United States. The company sells more than 25 domestic and exotic species of hardwoods from more than 340 stores in approximately 45 U.S. states and Canada, as well as over the Internet, by catalog, and from its Virginia call center. The company also offers antique and reclaimed boards, laminate flooring, moldings, and installation products.
 
Restoration Hardware (RH) Consumer Discretionary  A B C+ n/a D n/a D B+

12/16/16
$21.37

B+
Restoration sells up-scale home and outdoor furnishings, garden products, hardware, bathware, lighting, textiles, and baby and child products through approximately 85 retail and outlet stores in 30 U.S. states, the District of Columbia, and Canada.


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