Looking For a Cheaper Way to Play GoPro? Check Out Ambarella

As much as $800 million in GoPro shares will soon be coming to market in a secondary offering. And while some experts say this is the time to buy, I think the better way to play GoPro's growth is through Ambarella, the semiconductor company that makes the chips that go into all of GoPro's devices. Ambarella is GoPro's sole chip provider, which allows it to have an incredibly lucrative monopoly over the fastest growing business in consumer hardware. And while Ambarella will always be inextricably linked to GoPro, its business spans far beyond just one customer relationship. The company has increasing exposure to several fast-growing sub-categories including IP and consumer video surveillance, automotive cameras, wearable cameras for law enforcement and even drones. But the biggest reason I like this stock is for its compelling valuation. Even though it is projected to grow sales at roughly the same rate as GoPro over the coming years it trades at a 50% discount on a price to earnings basis. That valuation gap is bound to close as the company continues to deliver exceptional growth and investors begin to appreciate the stability of its diversified portfolio. So instead of flocking to your favorite stores this holiday season in search of deals, the best bargain out there may very well be Ambarella shares.