This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Buy Brocade and Broadcom, Hold Marvell Technologies

NEW YORK ( TheStreet) -- Network equipment maker Brocade (BRCD - Get Report) 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 - Get Report), 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.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BRCM $51.42 -0.30%
BRCD $12.01 2.56%
MRVL $13.16 -0.75%
AAPL $125.69 -0.25%
FB $87.22 -0.38%

Markets

DOW 17,776.91 +93.33 0.53%
S&P 500 2,081.34 +12.58 0.61%
NASDAQ 4,997.4590 +5.5190 0.11%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs