What happened

Shares of tech company II-VI (COHR 0.70%) soared 40.2% in the first half of 2020, according to data provided by S&P Global Market Intelligence. That very nearly set a new all-time record for the stock, which is now up 145.3% over the last five years. 

So what

II-VI (pronounced "two-six") manufactures high-tech devices, focusing especially on lasers and laser components. Following its merger with optical communications company Finisar in September, II-VI has focused on lasers used in communications and communications networks. Its components will be critical to the much-anticipated rollout of 5G wireless technology

A man traces an upward-curving line of light with his finger.

Image source: Getty Images.

However, the 5G rollout has hit plenty of pitfalls, not the least of which has been concerns about components coming from China, and the involvement of Chinese company Huawei, which has ties to the Chinese government. The issue has been a sticking point in trade negotiations with China, and the ongoing dispute has hamstrung II-VI's shares.

That all changed after II-VI released a stellar earnings report in May for the quarter ended March 31. II-VI blew expectations out of the water, raking in a slightly higher than expected $627 million in revenue, and earnings per share of $0.47, which was more than triple what analysts were expecting, even with the additional boost from the merger factored in. The company's guidance called for even higher revenue in its fiscal fourth quarter, which ended June 30. An impressed market bid shares sharply upward on the news.

Now what

Despite delays and security concerns, a 5G rollout is seen as an eventual certainty, and companies and manufacturers around the world aren't waiting until it actually gets deployed: They're proactively upgrading their networks and products to be 5G compatible, and using II-VI's components to do it. Demand is high and that's why II-VI is outperforming. 

This trend is likely to continue, but with II-VI shares near their all-time highs, shares aren't exactly cheap. Still, this company is in the right place at the right time, and investors may want to consider buying in now to secure a position before the 5G rollout begins in earnest.