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Here's Why You Should Add Marvell Tech to Your Portfolio

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Marvell Technology Group Ltd. (MRVL - Free Report) has been gaining from surging demand for SSD drives from enterprise and data-center operators. Notably, the company beat the Zacks Consensus Estimate in all four trailing quarters with an average earnings surprise of 4.2%.

With expected long-term earnings per share growth rate of 11.3% and a market cap of $9.9 billion, it seems to be a stock that should find a place in investors’ portfolio.

Notably, the stock has rallied 19.5% in the last year, outperforming the industry's gain of 15.7%.



Let’s take a look at the factors aiding the company’s performance.

Marvell is a promising player in the solid state drive (SSD) controllers market. Over the next few years, the company expects an increasing number of PCs/servers to use flash-based solid state technology for storage.

Management is optimistic about the first-ever NVMe SSD chipset meant to address the requirements of new-age cloud and enterprise data center applications. Notably, this chipset is aligned with the recently announced Microsoft (MSFT - Free Report) project called Denali.

The company’s automotive ethernet business is also gaining traction. NVIDIA (NVDA - Free Report) recently selected Marvell’s automotive ethernet switch for its Pegasus platform that is used for handling level V driverless vehicles.

Notably, the company is poised to gain from strong demand for its 4G LTE products as well.

Going ahead, Marvell’s latest deal to acquire Cavium will broaden its offerings beyond hard disk drives microprocessors and help it enter high growth areas such as data centers and wireless communications.

Most recently, the company announced the pricing of its public offering of $1 billion aggregate principal amount of senior notes. The proceeds from the offering will be used to partly fund the cash consideration of its previously-announced acquisition of Cavium.

The buyout will give Marvell direct access to the server microprocessor market, which is currently dominated by Intel (INTC - Free Report) and thereby boost its top line.

These aspects and Marvell’s strong balance sheet, which had $1.84 billion of cash, cash equivalents and short-term investments at the end of fiscal 2018, make us optimistic about this Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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