5-Star Stocks Poised to Pop: II-VI

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, laser products specialist II-VI (NAS: IIVI) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at II-VI's business and see what CAPS investors are saying about the stock right now.

II-VI facts

Headquarters (Founded)Saxonburg, Penn. (1971)
Market Cap$1.2 billion
IndustryElectrical components and equipment
Trailing-12-Month Revenue$502.8 million
ManagementCEO Francis Kramer (since 2007)
CFO Craig Creaturo (since 2004)
Return on Equity (Average, Past 3 Years)13.7%
Cash/Debt$149.5 million / $18.7 million
CompetitorsCoherent (NAS: COHR)
Northrop Grumman (NYS: NOC)
Raytheon (NYS: RTN)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 98% of the 1,312 who have rated II-VI believe the stock will outperform the S&P 500 going forward. These bulls include CaffeineHead and All-Star HLChin, who is ranked in the top 1% of our community.

A few months ago, CaffeineHead listed several of II-VI's positives:

1) Heavy Insider Ownership
2) Experienced Management
3) Make a product that must be repurchased again and again due to wear and tear
4) Small Cap (lots of growth left)
5) Fantastic Balance Sheet

Over the next five years, in fact, II-VI is expected to grow its bottom line at a sold rate of 14% annually. That's faster than listed rivals like Coherent (12.5%), Northrop Grumman (8%), and Raytheon (9%).

CAPS All-Star HLChin elaborates on the II-VI bull case:

Let's make no bones about it, it's a cyclical company. In 2009, yearly EPS dropped by 55% from 90 cents in 2008 to 40 cents in 2009. The P/E in March 2009 averaged at approximately 13. In 2009, IIVI managed to eke out a profit in the worst of times and remain cash-flow positive for the most part.

That's approximately the P/E range where we are now. I believe that IIVI has strengthened financially since then.

This is just a first glance on historical guidance, combined with a belief that we will not revisit the 2009 lows in revenue.

What do you think about II-VI, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track II-VI?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of II-VI. The Fool owns shares of II-VI, Northrop, and Raytheon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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