By John Russell, reporter for

This story was originally published on RealMoney on April 16 at 5:53 P.M. EDT.

Investors dumped chipmakers across the board on Wednesday after Intel ( INTC) failed to provide significantly bullish guidance, but there's still one name they like: Marvell Technology Group ( MRVL).

The stock has climbed steadily since bottoming out below $5 in November and could keep marching higher before its earnings report in about one and a half months.

The Hamilton, Bermuda-based business is built to deal with hard times. As a "fab-less" semiconductor company, it's less vulnerable to falling sales because it uses outside manufacturers to produce its chips. That means management doesn't have to worry about margins getting eaten up by underutilized factories.

For instance, Marvell's gross margin rose more than 2 percentage points last quarter despite a 39% sales drop. In contrast, Intel's gross margin plunged almost 8 percentage points in the first quarter on a much smaller revenue decline.

Even if this business model gives Marvell natural defenses to deal with an uncertain environment, management has taken further steps. It's cutting 850 jobs and inventories have been worked down, reducing the danger of writedowns if it can't sell products.

In addition, the company has been cutting debt and stockpiling cash. Thanks to these efforts, Marvell's book value fell by a mere $2 million on a sequential basis last quarter despite reporting a $65 million loss.

Most important, Marvell options are heating up. On Wednesday, traders were aggressively buying the near-the-money May calls, but those run the risk of expiring worthless if Marvell doesn't keep appreciating right away. A safer way to play the name is to purchase November $5 calls for $5.70.

Marvell has done twice as well as the broader Nasdaq this month and has now halted around $10.30, an old support level that has become resistance. But with earnings expected out in early June, we expect Marvell to keep pushing higher.

Last quarter it gapped higher on a bullish forecast -- that memory could give investors the confidence to keep buying it in coming weeks.
At the time of publication, Russell had no positions in the stocks mentioned.