Speculating on the Semis
Cramer on Friday talked up a spec stock that works as both a momentum and a value play. And he brought the company’s CEO on Mad Money to get the inside scoop.
Marvell Technology makes the chips that are at the heart of Cramer’s favorite growth trend, the mobile Internet tsunami, and it’s just the kind of stock that investors want in a volatile market like this one. Because when stocks are rapidly rising and falling with an alarming regularity, a strong secular theme like this helps you ride it out.
Marvell designs semiconductors used in hard drives, Ethernet networking equipment and mobile phones, but the growth is coming from the wireless business. In the most recent quarter, sales were up 18% from the previous quarter, and management predicted another 25% for the next.
Still, the valuation is worth noting, too. MRVL is down 22% from its high on April 15. Now the stock is trading at 10 times next year’s earnings with a long-term growth rate of 16%, meaning its very inexpensive right now. Plus, there’s $2.83 of cash per share in their near $18 stock, or about 15% of the share price.
That’s “too cheap to ignore,” Cramer said, “especially for a stock in a huge growth area.”
So, what’s next for Marvell? Watch Cramer’s interview with Chairman and CEO Dr. Sehat Sutardja to find out.
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