Buy Brocade and Broadcom, Hold Marvell Technologies

NEW YORK (TheStreet) -- Network equipment maker Brocade (BRCD) has always been one of those names that I just can't seem to figure out.

While the stock continues to trade at a relatively low price, trying to time a good entry point has always been a challenge. Although the price might be low, its trading multiple remains considerably unattractive when compared to such competitors as Cisco (CSCO) and Hewlett-Packard (HPQ).

That said, it is hard to ignore the fact the company is in an industry that is showing decent growth. There is a lot to like with the company's business. In particular is its management, whose main objectives (among other things) continue to be broadening the company and lessening its dependency on its storage business.

This strategy has worked so well that I continue to make the case that Brocade will soon become an acquisition candidate to the likes of Cisco or Dell (DELL).

Brocade will be reporting its third-quarter results on Thursday after the market close and the company will be out to prove just how undervalued it really is. Analysts are expecting earnings per share to arrive at 12 cents on revenue of $536.93 million. The company has either met or exceeded expectations over the past four quarters and this report will be no different.

For these reasons I think it would be wise for investors to add some shares ahead of the announcement. The only question is, will its guidance make the Street happy? It was clear that in its last report Brocade issued guidance that kept the stock rangebound.

For similar reasons, I also like the prospects of Broadcom (BRCM), which recently reported an excellent quarter including net income of $160 million, or 28 cents per share, on revenue of $1.97 billion.

The company's sales total for the quarter represents a sequential increase of almost 8% and an annual increase of almost 10%. While some may argue it was a small beat, in this environment anyone will take it, even Apple (AAPL).

What also stood out was Broadcom's operating income. Although it declined slightly from the previous year, on a sequential basis it showed a considerable improvement from its first quarter.

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