Broadcom LimitedAVGO is currently a well-performing technology stock and a rise in share price and strong fundamentals signal its bullish run. Therefore, if you haven't taken advantage of the share price appreciation yet, it's time you add the stock to your portfolio.
The company has performed extremely well so far this year and has the potential to carry on the momentum in the near term.
Here are a few reasons why the stock is worth considering
A look at the company's price trend reveals that the stock has had an impressive run on the bourse year to date. Broadcom has gained 49.3%, significantly outperforming the industry 's rally of 32.6%.
Solid Rank & VGM Score
Broadcom carries a Zacks Rank #2 (Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities to investors. Thus, the company appears to be a convincing investment proposition at the moment.
Northward Estimate Revisions
For the current year, three estimates have moved north over the past 30 days versus one southward revision, reflecting analysts' confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year increased 4.7%.
Positive Earnings Surprise History
Broadcom has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive earnings surprise of 4.5%.
Broadcom Limited Price and EPS Surprise
Strong Growth Prospects
The company's Zacks Consensus Estimate for fiscal 2018 earnings of $17.88 reflects year-over-year growth of 11.6%. Moreover, earnings are expected to register 9.1% growth in fiscal 2019. The stock has long-term expected earnings per share growth rate of 13%.
Solid Growth Drivers
Broadcom is benefiting from strong demand for its wireless solutions. Higher dollar content at the company's large North American smartphone customer's next-gen platform is a key catalyst.
Broadcom's expanding product portfolio makes it well-positioned to address the needs of rapidly growing technologies like Internet of Things (IoT) and 5G. Broadcom has strong ties with leading OEMs across multiple target markets that will help it to gain key insights into the requirements of customers.
We believe that the company's extensive product portfolio, which serves multiple applications within four primary end markets (Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other), will help it to gain significant market share in the long haul.
Moreover, the company recently launched its first-ever silicon-proven 7nm intellectual property (IP) targeting application-specific integrated circuit (ASIC) platform for deep learning and networking markets.
Acquisitions have played a significant role in deciding Broadcom's growth trajectory. The long-delayed Brocade acquisition will boost the company's position in the storage area networking (SAN) space.
Broadcom is now targeting Qualcomm QCOM . On Nov 6, the company had offered $70 per share, which was rejected by Qualcomm's board as it undermined the company's value.
However, Broadcom remains committed to pursue the Qualcomm acquisition. On Dec 4, Broadcom notified Qualcomm of its intention to nominate 11 individuals for election to Qualcomm's board at the 2018 annual meeting of stockholders on Mar 6, 2018.
The company has also announced its intent to redomicile in the United States that will help it pursue the Qualcomm acquisition more aggressively. The move will help it to clear regulatory hurdles.
Other Stocks to Consider
A couple of stocks worth considering in the broader technology sector include Activision Blizzard ATVI and Red Hat RHT each carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings per share growth rate for Activision, Red Hat and Five9 is projected to be 13.8%, 15.8% and 20%, respectively.
Wall Street's Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.