2 Risks Investors Might Be Ignoring About Applied Optoelectronics

The stock of broadband fiber network parts supplier Applied Optoelectronics Inc (NASDAQ: AAOI) is down some 30% since its latest quarterly report after hitting record levels in July. The stock is up roughly 175% so far this year. Based on forward expectations, the stock looks pretty cheap, but the drop may not be over if the company can't maintain its revenue and profit momentum.

A couple of months ago -- right before AOI's big slump started -- I warned investors of the biggest risks facing tech supply companies: sales cycles. My piece was by no means prophetic, nor do I possess any special insight here. Rather, it's simply about understanding the fact that following a big boom in sales, companies that supply parts used in a more complex final product tend to experience a slowdown.

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Source: Fool.com