The stock market has witnessed a massive sell-off on worries over the Federal Reserve’s aggressive interest rate hikes to tame the high inflation. Amid efforts to bring down the rising…
inflationary pressure, the central bank raised the interest rates by 75 basis points last month.
Moreover, increasing odds of a recession have spooked investors, leading to high market volatility. According to Morgan Stanley, the S&P 500 has yet to price in a full-blown economic recession. The S&P 500 witnessed its worst first six months since 1970.
Given this backdrop, we think quality stocks Broadcom Inc. (AVGO), Cirrus Logic, Inc. (CRUS), Renesas Electronics Corporation (RNECF), and Xperi Holding Corporation (XPER), which possess impressive growth attributes, could be solid additions to your portfolio. These stocks have been graded A for growth in our proprietary rating system.
Broadcom Inc. (AVGO)
AVGO designs, develops, and supplies various semiconductor devices, emphasizing complex digital and mixed-signal complementary metal oxide semiconductor-based devices and analog III-V-based products worldwide. The company has two operational segments, Semiconductor Solutions, and Infrastructure Software.
In May, AVGO announced an agreement under which AVGO will purchase all of the outstanding shares of VMware in a cash-and-stock transaction that values VMware at approximately $61 billion, based on the closing price of Broadcom common stock on May 25, 2022. Also, AVGO will assume $8 billion of VMware net debt.
In May, AVGO announced the delivery of its high bandwidth monolithic automotive Ethernet switch device, the BCM8958X, designed to address the increasing bandwidth need for in-vehicle networking applications and facilitate the adoption of software-defined vehicles (SDV).
The BCM8958X features 16 Ethernet ports, of which up to six are 10 Gbps capable, as well as integrated 1000BASE-T1 and 100BASE-T1 PHYs, providing higher flexibility and switching capacity needed to support automotive zonal electronic control unit (ECU) and central compute ECU architectures.
During the second quarter ending March 31, 2022, AVGO’s Non-GAAP net revenue increased 23% year-over-year to $8.10 billion. Its operating income grew 71.8% from its year-ago value to $3.39 million, while its Non-GAAP net income improved significantly from its prior-year quarter to $4.00 billion. The company’s EPS rose 37% year-over-year to $9.07.
The $9.55 consensus EPS estimate for the third quarter, ending July 2022, represents a 37.2% improvement year-over-year. Analysts expect its revenue to increase 24% year-over-year to $8.41 billion for the same period. In addition, it has an impressive earnings history as it surpassed the consensus EPS estimate in all of the trailing four quarters.
AVGO’s revenue has grown at a CAGR of 13% over the past five years. Furthermore, the company’s EBITDA has grown at a CAGR of 18.4% over the past three years.
AVGO’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has an A grade for Growth and Quality and a B grade for Sentiment. Within the B-rated, 96-stock Semiconductor & Wireless Chip industry, AVGO is ranked #8.
To see additional POWR Ratings for Stability Momentum and Value for AVGO, click here.
Cirrus Logic, Inc. (CRUS)
CRUS is a fabless semiconductor company that offers low-power and high-precision mixed-signal processing solutions in the United States and internationally. It offers portable products, including codecs components that integrate analog-to-digital converters (ADCs) and digital-to-analog converters (DACs) into a single integrated circuit (IC).
For the fourth quarter ending March 26, 2022, CRUS’ net sales increased 32.2% year-over-year to $290.66 million. The company’s income from operations grew 67% from its year-ago value to $489.97 million, while its net income improved 281.4% from its prior-year quarter to $96.41 million. The company’s EPS rose 290.5% year-over-year to $1.64.
Analysts expect CRUS’ revenue to increase 32.3% year-over-year to $366.72 million in the first quarter ending June 2022. The consensus EPS estimate of $0.83 for the first quarter ending June 2022 represents a 53.4% improvement year-over-year. Moreover, it has an impressive earnings history as it surpassed the consensus EPS estimate in all of the trailing four quarters.
CRUS’ revenue has grown at a CAGR of 14.5% over the past three years. Furthermore, the company’s EBITDA has grown at a CAGR of 34.6% over the past three years.
CRUS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system. The stock also has an A grade for Growth and a B for Quality and Value. Within the Semiconductor & Wireless Chip industry, it is ranked #5 of 96 stocks.
In total, we rate…
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