Reasons to Be Bullish on Marvell Technology

| About: Marvell Technology (MRVL)
Well, so much for the rally on Tuesday. I put some more money to work and added to my Apple (NASDAQ:AAPL) holdings today. Another stock in the tech sector I like more and more is Marvell Technology (NASDAQ:MRVL), which designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone ARM-based microprocessor integrated circuits. It offers mobile and wireless products, including communications processors, applications processors, and standalone wireless products, as well as combination devices, which incorporate wireless, Bluetooth, and FM radio capability.
The company also provides storage products comprising tape drive controllers, read channel, hard disk controllers, solid-state drive controllers, hybrid drive controllers, and storage-system products for hard disk drives, tape drive electronics, optical disk drives, solid-state flash drives, hybrid drives, and storage subsystems technology. In addition, it offers networking, such as switching products that enable voice, video, and data traffic to be carried through the network for the enterprise networking, carrier access, and small office/home office/residential networking markets; communications controller and embedded processor products; and enterprise transceiver and Ethernet connectivity products.
Nine reasons to start to build a position in Marvell at around $14 a share:
  1. Marvell is selling at approximately 9.5 times this year’s earnings and around 8.5 times 2012’s consensus EPS.
  2. It should have 20% quarter over quarter growth in the wireless space next quarter and is projected to grow total revenues in the double digits in 2012.
  3. Marvell has a rock solid balance sheet with over $3.50 a share in net cash. It sells for less than 8 times operating cash flow.
  4. Insiders have a significant stake in the company and there is next to no insider selling despite the negative market news.
  5. The company bought back over $670mm in shares last quarter and still has over $300mm left on a stock repurchase program it is initiated this year.
  6. The supply chain challenges from the disaster in Japan should start to dissipate in the second half of the year. It should also benefit from additional deployments of TD-SCDMA smart phones in China.
  7. MRVL has underperformed the market over the last year, is closing in on its 52-week low, and is getting near a price level it has bounced off twice in the last 18 months (November 2009 and August 2009).
  8. MRVL is selling at the bottom of its five valuation range based on P/E, P/B, P/S, and P/CF.
  9. Marvell at $14 is significantly under numerous price targets. Credit Suisse is at $22 on MRVL, S&P has a $19 price target, and Citigroup is at $24 a share almost 75% over its current price.
Disclosure: I am long AAPL.
Additional disclosure: May also go long on MRVL in the next 72 hours.