 Submitted By Joshua Hayes
Earnings Growth In This Semiconductor Company Is Taking Off
Everyone that loves to make money knows that growth in earnings and sales is very important in the best stock. For those that are looking to put their money in a relatively cheap technology stock that is showing some huge recent growth in EPS and sales look no further than Marvell Technology Group (MRVL).
MRVL is an Electronice-Semiconductor Manufacturing stock that designs analog, digital, mixed-signal and microprocessor ICS for storage, telecom/data, and consumer markets. Recently on June 3rd the company introduced the 88NV8120 PCI Express-based NAND flash controller for use in both PC’s and Mobile Internet Devices. It is very cool products like this that now has the stock making investors a lot of money since the January lows. And I doubt the price gains are finished right here.
MRVL has recently shown some amazing EPS growth with EPS growing 17%, 567%, and 380% the past three quarters. Not only is the current growth fantastic the expectations are even better. For 2009 and 2010 analyst expect this companies EPS to grow 116% and 16% respectively to .95 and 1.10 per share.
While the EPS has only recently been put back on track, sales have been “going off” since July 2006 with sales growth of 47%, 22%, 27%, 22%, 14%, 46%, 36%, and 27% the past eight quarters. This is the kind of sales growth that drives the best stocks every year.
That growth comes from the 8% ROE that combined with a 12% debt to shareholder equity helps in keeping this stock cooking giving it a five year EPS growth rate of 21%. That combined with the p/e ratio of 26, which is in the low end of the 5-year range of 19 to 70, is yet another fundamental factor in why this stock will continue to grow and make money into the intermediate term future. With an EPS of .24 and a current cash flow of .65 it is clear to me that this company knows how to operate.
Those kind of numbers is the reason management owns 19% and investment funds own 28% of the stock. All of the smart money is putting their investments into the available shares outstanding.
This stock is a very strong stock on a relative strength basis and is in the top 10% of stocks based on price performance the past 52 weeks. Historically, the best stocks are in the top 10%. And this stock is not shy of friends that are leading this electronics-semiconductor manufacturing group higher. STEC, IXYS, VLTR, PSEM, and NETL have made investors a lot of money since the March lows. With the way the fundamentals look in each of these stocks, I truly doubt the top is here. Most of these will more-than-likely base out, break out, and then run again.
Investors Business Daily confirms the strong fundamentals with the stock coming in with an EPS rating of 92, an RS (relative strength) rating of 93, a group RS rating of 81, an SMR rating of B, and accumulation/distribution rating of a A-, a composite rating of 95, a timeliness rating of B, and a mutual fund sponsorship rating of C. Overall these are fantastic numbers confirming the actual fundamentals.
I don’t just use fundamentals when I invest. I also use technicals and with my current long position, I will not let this stock reverse and close below the 50 DMA (the white line on top window). The stock has to keep moving higher and making me money or else I want to park my money in a different winning stock.
At the time of publication, Joshua was long MRVL
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