LSI Corp (NASDAQ:LSI) is expected to see revenues up 22% in 2012, but sees declination of 5% in 2013, where growth is held back by weakness in its core hard disk drive business. This decline in hard disk demand is in large part due to the increasing prominence of Ultrabook PCs and tablets. One positive for LSI is its solid-state drive business, which accounts for roughly one-tenth of revenues, where growth is expected to be upwards of 200% this year. Although we are encouraged by this segmented growth, we remain concerned given it is still only a small portion of sales.
Valuation is another point of concern. Due to the tech company’s less than stellar growth prospects, it likely should not trade in line with Qualcomm and Broadcom, near 20x earnings. Interestingly, billionaire Ken Griffin – founder of Citadel Investment Group – is one of LSI’s top investors with over 23 million shares owned as of 3Q (check out Ken Griffin’s new picks).
Intel Corporation (NASDAQ:INTC), meanwhile, is the chip-making giant that is feared by many as a value trap, but it does have appreciative potential going forward. Revenues are expected to be down 1% year over year in 2012, due to soft PC sales. Boding well for Intel is its scale, though, giving it exposure to quickly-growing emerging markets, as two-thirds of PC demand is currently coming from this area. Intel trades the cheapest of the five stocks listed here at 9x earnings, and its solid 5-year expected EPS CAGR of 12% puts its PEG near 0.8. Ken Fisher – founder of Fisher Asset Management – is one of Intel’s top shareholders (see Ken Fisher’s newest picks).
Broadcom Corporation (NASDAQ:BRCM) is one of the best value/growth stories in the semiconductor market, expected to grow EPS at 12.5% annually for the next five years. Couple this with its industry-low P/E and the stock trades with a PEG of only 0.9. Sales are expected to be up 8% in 2012 and 7% in 2013. Broadcom also has strong positions with Samsung and Apple and has a exposure to the fastest growing semiconductor markets: mobile, broadband and network infrastructure. Jim Simons is one of Broadcom’s big-name investors (check out Jim Simons’ top picks).
Qualcomm, Inc. (NASDAQ:QCOM) is another solid investment opportunity offering growth at a reasonable price. The stock trades at only 15x earnings, but is expected to grow long-term EPS at 16% annually, putting its PEG just below 1.0. Revenues are expected to be up 25% in FY2013 and 10% in FY2014 on the back of high penetration in the smartphone marketplace. Qualcomm also boasts a strong balance sheet, with over $12 billion in cash and no debt. This will help the tech company make strategic acquisitions and allow for potential dividend hikes; its current dividend yields 1.7%. Now, George Soros’ was actually dumping 50% of his shares last quarter (see all of George Soros’ new picks), but it’s likely that this move was purely tax-motivated.
To recap: we believe that the recent sell-off of Marvell shares presents investors with a solid investment opportunity. Marvell’s recent sell-off suggest investors are banking on a reconsideration of the $1.2 billion ruling, suggesting the total payout might only be 60% of the award. We believe this is a solid thesis and feel that the tech company will also take necessary measures to preserve its $0.06 per share dividend. For more similar coverage, continue reading below:
Billionaire Ken Griffin bought this semiconductor play
