Fabrinet Keeps Data Centers Humming. Shares Eye A Buy Point.

Data center component provider Fabrinet (FN) is Thursday’s IBD 50 Growth Stocks To Watch pick as shares are recovering after a harsh but brief earnings sell-off.

Fabrinet stock was wavering around the 500 price level Thursday. Shares are about 5% below the buy point of a consolidation pattern.

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The IBD Big Cap 20 name specializes in optical lenses, sensors, lasers and electrical components. Its optical parts, switches and cables are used in data centers. Fabrinet also offers component testing, inspecting and assembly services.

It serves growing markets in telecommunications, data networking, high-performance computing, automotive and medical devices, according to its Feb. 2 investor presentation. Fabrinet has factories in Thailand, the U.S., China and Israel.

It ranks No. 1 out of 16 stocks in the Electronics-Contract Manufacturing group, which holds the 20th spot out of the 197 industries that Investor’s Business Daily tracks.

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Data Center Stock Retakes Moving Averages

Fabrinet rebounded quickly after it plunged 15% in a two-day sell-off in heavy volume, following its earnings report. Shares were punished despite better-than-expected earnings and sales for its fiscal second quarter.

The stock tends to show big swings, as captured in its 21-day average true range of 7.8%, which is greater than IBD’s target of 5% or less. Further, Fabrinet is in a stage-two consolidation pattern with a 531.22 buy point, according to MarketSurge pattern recognition.

The entry is also its all-time high, reached on Dec. 11. Fabrinet is back above its 21-day exponential moving average and its 50-day moving average, which are positive signs for the stock.

Its relative strength line reached a 52-week high, as shown by the blue dot on its weekly chart. Fabrinet stock has outperformed 95% of stocks that IBD tracks.

Shares continue to act strongly and have gained around 10% so far this year, after more than doubling in 2025. And its IBD Timeliness Rating of A indicates a potential for positive relative price performance over the next 12 months.

Mutual funds own a hefty 78% of shares and have increased their holdings for two straight quarters, according to IBD Stock Checkup. Several IBD Mutual Fund Index names hold positions in Fabrinet stock, with the largest in T. Rowe Price New Horizons Fund (PRNHX) and Invesco Discovery Fund (OPOCX).

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Fabrinet Shows Steady Profits

Fabrinet reported fiscal second-quarter earnings of $3.36 per share on sales of $1.13 billion. It also issued a fiscal third-quarter revenue forecast in the range of $1.15 billion to $1.2 billion with profit between $3.45 and $3.60 a share.

Analysts have recently revised their fiscal 2026 earnings projections upward to $13.58 a share, or a 34% increase, followed by $16.26 in fiscal 2027.

The company has been a steady profit grower as seen in its Earnings Stability factor of 5 out of 99 possible — with a lower number being better.

Lastly, it holds a pristine 99 IBD Composite Rating and a 97 Earnings Per Share Rating.

Follow Kimberley Koenig for more stock market news on X, the platform formerly known as Twitter, @IBD_KKoenig.

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