IPG Photonics Corporation (IPGP): 1 Stock to Buy in June

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That leaves Rofin, Coherent, and Newport as the primary competition. But a huge weakness each of these companies have is that they also count heavily on carbon-based lasers for a bulk of their revenue. That means that the company’s attention is split, and that in order to develop fiber lasers, they will have to cannibalize their traditional carbon-based offerings.

In 2012, Rofin-Sinar Technologies (NASDAQ:RSTI) noted that revenues were down significantly for carbon lasers, while the only segment producing positive trends were fiber optics.

Coherent, Inc. (NASDAQ:COHR) recently reported that revenue for its material processing fiber-optic lasers jumped 16% from the previous year. That’s not bad, but it’s nowhere near the 29% increase IPG Photonics Corporation (NASDAQ:IPGP) experienced in the same sector over the same time frame.

And Newport Corporation (NASDAQ:NEWP) announced that net sales actually dropped during the first quarter of 2013 by 16%, which caused earnings to plummet almost 60%!

Clearly, though I’m sure the lasers these companies offer are fine, they aren’t as advanced as IPG’s, and the corporate structure doesn’t allow for such focused marketing and development of the new wave of lasers.

How to proceed
As I said, when trading rules allow, I’ll be buying about $450 worth of IPG Photonics Corporation (NASDAQ:IPGP) stock, as that’s 1/12th the allowance for a Roth IRA.  I think today’s price-to-earnings ratio of about 20 underestimates the long-term possibilites for this leading disruptive innovator.

The article 1 Stock to Buy in June originally appeared on Fool.com and is written by Brian Stoffel.

Fool contributor Brian Stoffel owns shares of Apple Inc. (NASDAQ:AAPL), IPG Photonics, and Nuverra Environmental Solutions Inc (NYSE:NES). The Motley Fool recommends and owns shares of Apple, IPG Photonics, Rofin-Sinar Technologies, and Sodastream International Ltd (NASDAQ:SODA). It also owns shares of Nuverra Environmental Solutions and has the following options: long Jan 2014 $4 calls and short Jan. 2014 $3 puts.

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