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Here's Why Marvell Technology Can Give Solid Returns in 2018
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As the eventful 2017 comes to a close, we believe this is the right time to make your investment plans for the upcoming year. Investors can consider Marvell Technology Group Ltd. (MRVL - Free Report) which has generated high returns for investors in the year so far and has the potential to exceed expectations in the next year as well.
The stock has appreciated approximately 59%, outperforming the industry’s return of 44.2%.
Let’s look at the reasons behind Marvell’s solid momentum.
What’s Driving the Stock?
Marvell is a promising player in the solid state drive (SSD) controllers market. Over the coming years, it projects an increasing number of PCs/servers to use flash-based solid state technology for storage. The storage market is witnessing a steady rise in demand, given fast-growing data volume, especially the exponential growth in unstructured data. The NAND (non-volatile storage technology) demand is likely to remain robust in the coming year as well.
SSD demand will also shoot up and might even surpass the manufacturing capacity, leading to periodic shortage and higher pricing in the near term. Marvell is benefiting from the increasing demand for SSD products. This is evident from the sequential increase in the company’s third-quarter fiscal 2018 revenues from the storage end market, which accounted for majority of total revenues.
Furthermore, we believe the elevated demand for Marvell’s 4G LTE products could be a key growth driver. This will be supported by growth from the company’s wide range of recently-launched Internet of Things (IoT) solutions.
In addition, the company’s recent restructuring initiative will help Marvell improve its cloud infrastructure and applications, which are anticipated to drive the top line. The latest buyback scheme also reflects its sound financial position and favorable prospects.
Also, the company’s four back-to-back quarters of better-than-expected bottom-line results have boosted investors’ confidence in the stock. Apart from this, an encouraging fourth-quarter fiscal 2018 outlook provided in the last quarterly earnings conference call also makes us optimistic about its near-term performance.
Upward Estimate Revisions
In the last 30 days, the Zacks Consensus Estimate for the current quarter and fiscal 2018 has been revised upward. For the current quarter, the Zacks Consensus Estimate is pegged at 31 cents, up 3 cents from earnings of 28 cents projected 30 days ago. Similarly, the Zacks Consensus Estimate for fiscal 2018 is currently pegged at $1.19 compared with $1.14 estimated 30 days ago.
Valuation Looks Attractive
From a valuation perspective, the stock looks attractive as it is currently trading significantly lower than the industry average, based on a forward earnings estimate. This signifies huge upward potential. Marvell currently trades at a forward P/E of 18.6x compared with the industry group average of 26.8x.
Keeping these positives in mind, we believe Marvell is one such technology stock that deserves a place in investors’ portfolio for better returns next year.
Some Other Key Picks
A few other top-ranked stocks in the broader technology sector that have favourable Zacks Rank and VGM Score are Micron Technology (MU - Free Report) , SMART Global Holdings (SGH - Free Report) and DXC Technology (DXC - Free Report) . All three sport a Zacks Rank of 1 and have VGM Score of A.
Long-term expected EPS growth rates for Micron, SMART Global Holdings and DXC Technology are 10%, 15% and 10.5%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>
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Here's Why Marvell Technology Can Give Solid Returns in 2018
As the eventful 2017 comes to a close, we believe this is the right time to make your investment plans for the upcoming year. Investors can consider Marvell Technology Group Ltd. (MRVL - Free Report) which has generated high returns for investors in the year so far and has the potential to exceed expectations in the next year as well.
The stock has appreciated approximately 59%, outperforming the industry’s return of 44.2%.
Let’s look at the reasons behind Marvell’s solid momentum.
What’s Driving the Stock?
Marvell is a promising player in the solid state drive (SSD) controllers market. Over the coming years, it projects an increasing number of PCs/servers to use flash-based solid state technology for storage. The storage market is witnessing a steady rise in demand, given fast-growing data volume, especially the exponential growth in unstructured data. The NAND (non-volatile storage technology) demand is likely to remain robust in the coming year as well.
SSD demand will also shoot up and might even surpass the manufacturing capacity, leading to periodic shortage and higher pricing in the near term. Marvell is benefiting from the increasing demand for SSD products. This is evident from the sequential increase in the company’s third-quarter fiscal 2018 revenues from the storage end market, which accounted for majority of total revenues.
Furthermore, we believe the elevated demand for Marvell’s 4G LTE products could be a key growth driver. This will be supported by growth from the company’s wide range of recently-launched Internet of Things (IoT) solutions.
In addition, the company’s recent restructuring initiative will help Marvell improve its cloud infrastructure and applications, which are anticipated to drive the top line. The latest buyback scheme also reflects its sound financial position and favorable prospects.
Also, the company’s four back-to-back quarters of better-than-expected bottom-line results have boosted investors’ confidence in the stock. Apart from this, an encouraging fourth-quarter fiscal 2018 outlook provided in the last quarterly earnings conference call also makes us optimistic about its near-term performance.
Upward Estimate Revisions
In the last 30 days, the Zacks Consensus Estimate for the current quarter and fiscal 2018 has been revised upward. For the current quarter, the Zacks Consensus Estimate is pegged at 31 cents, up 3 cents from earnings of 28 cents projected 30 days ago. Similarly, the Zacks Consensus Estimate for fiscal 2018 is currently pegged at $1.19 compared with $1.14 estimated 30 days ago.
Valuation Looks Attractive
From a valuation perspective, the stock looks attractive as it is currently trading significantly lower than the industry average, based on a forward earnings estimate. This signifies huge upward potential. Marvell currently trades at a forward P/E of 18.6x compared with the industry group average of 26.8x.
Hence, there is still much momentum left in this Zacks Rank #1 (Strong Buy) stock, which is quite evident from its VGM Style Score of A and long-term earnings growth rate of 16.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Keeping these positives in mind, we believe Marvell is one such technology stock that deserves a place in investors’ portfolio for better returns next year.
Some Other Key Picks
A few other top-ranked stocks in the broader technology sector that have favourable Zacks Rank and VGM Score are Micron Technology (MU - Free Report) , SMART Global Holdings (SGH - Free Report) and DXC Technology (DXC - Free Report) . All three sport a Zacks Rank of 1 and have VGM Score of A.
Long-term expected EPS growth rates for Micron, SMART Global Holdings and DXC Technology are 10%, 15% and 10.5%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>