Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares Alliance Fiber Optic Products, Inc. (NASDAQ: AFOP ) jumped more than 12% Wednesday after the optical network equipment specialist announced encouraging preliminary first-quarter sales results.
So what: Quarterly revenue is now expected to rise roughly 104% year over year to $24.8 million, or 10% higher than the $22.5 million guidance Alliance provided in early February. As a result and without providing specific numbers, Alliance says it expects to report record quarterly profits as well.
Analysts on average, were modeling first quarter earnings of $0.27 per share on sales of $22.53 million.
Now what: Those estimates should increase as analysts have time to fully digest today's news, so the stock could still prove a bargain, with shares currently trading at just 14.5 times next year's expected earnings. However, keep in mind we're also talking about a relatively small company whose modest revenue base could be subject to wide swings. As a result, while I wouldn't be too anxious to sell any existing shares after today's pop, investors may consider treading lightly when opening new positions until we receive more color on Alliance's first quarter results on April 24.
Are you ready to profit from this $14.4 trillion revolution?
In the meantime, there are plenty of other promising small-cap stocks in which you can put your money to work.
And let's face it: Every investor wants to get in on revolutionary ideas before they hit it big -- like buying PC maker Dell in the late 1980s, before the consumer computing boom, or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hypergrowth markets. The real trick is to find a small-cap "pure play" and then watch as it grows in explosive fashion within its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 trillion industry. Click here to get the full story in this eye-opening report.