Is $AVGO stock a good long term investment?
BROADCOM INCORPORATED COMPREHENSIVE RESEARCH
AVGO $AVGO formerly $BRCM.
Stock name and Trading Platform–
Broadcom Incorporated, publicly traded on the NASDAQ exchange on the S&P 100, S&P 200, and NASDAQ-100 indices.
The Stock Sector
AVGO is classified in the Technology (Semiconductors and Computer software) Sector. Founded and headquartered in San José, California, the heart of Silicon-valley, it has lived up to the well-founded reputation of the area.
AVGO is an American-based manufacturer, designer, and leading supplier of Semiconductors globally.
There are critical B2B (business to business) producers of the basic components (hardware and software) that form the tech industry.
Consequently, they are a third-party provider to Tech-giants like:-
- Lenovo, Cisco Systems, and a myriad of other prominent companies.
AVGO has thus established itself as an essential provider at the core of its value chain, running a plethora of subsidiaries under its wing.
Broadcom operates a diverse product line offering services ranging from:-
- data center,
- storage, and more, hence incorporating a vertical integration supply model.
Such is the dominance of AVGO in its market niche, that it has received antitrust laws and anticompetitive practices allegations by the European Union.
AVGO has been an interesting topic to analysts and market watchers. Many seem to have similar views concerning the trajectory of this stock.
AVGO recently released their earnings on the 03 of March 2022 which took the world by storm as they performed extremely well compared to many in the tech space.
AVGO is one of the current top trending stocks with many flocking to it based on the impressive Q1 results.
AVGO has been a great trade over the past year and has generally outperformed the overall market by a fairly wide percentile.
At the time of writing, AVGO has spiraled in the past 24 hours. It is also experiencing day-low trading prices which will likely see ups and downs.
Current Position of AVGO
Zacks Equity Research analysts released their investigative report on the performance of a number of its forecasts of which AVGO was part.
AVGO shares have jumped 25% over the past year, beating the projected 11.4% rise of the Semiconductors industry done by Zacks electronics.
AVGO has shown strong market performance both recently and over the past decade.
It is now ranked by analysts as a top-tier stock in the NASDAQ exchange. The spontaneous growth of AVGO is credited to several factors that fueled the rise.
Key to this is the widespread proliferation of 5G broadband services
- AVGO is a leading provider in the broadband space.
- Semi-conductor production is probably AVGO’s top earner raking in the majority of the margins. The global demand for semiconductors currently outstrips supply and the advent of the electric vehicle revolution will spur more production consequently increasing profitability for semiconductor companies.
- The utility of the wireless and wired chipsets is not only employed in consumer electronics but also in enterprise applications.
AVGO’s current financials are remarkable
It has performed pretty firmly compared to big tech stocks like Apple ($AAPL). AVGO is seen as a solid ‘safe haven’ given that it has not rallied as much as other tech stocks (Overvaluation).
And it conversely has not crashed like many stocks that have not met their targets (underperformance).
- The stock is very defensive although not as bearish as other companies.
- However, many believe that with the strong financials and underlying fundamentals that AVGO has, it is set to be not only a hedge against investment risks but also a huge money-maker.
AVGO is a well-consolidated group that has proved to be formidable and a force to reckon with.
They have been very aggressive and bullish on Mergers and Acquisitions, having merged Avago and Broadcom for $17 billion and acquiring a lot of companies including:-
- Symantec enterprise,
- CA technologies,
- PLX technologies, and
- Emulex for billions of dollars.
AVGO has a reputation for working with fortune 500 companies and captains of the industry.
The reliance of companies on AVAGO for essential components and services makes it almost too big to fail.
But if history is to go by, former long-existing mammoth corporations have fallen and some analysts believe they have identified flaws in AVGO’s operations.
This is particularly in its Valuation metrics analysis.
Analysts believe that AVGO is trading at a low price compared to the Price-earnings (P/E) ratio, which was about 39.8 trailing for the past 12 months.
This means that investors are paying more than what the stock is worth in terms of earnings per share (EPS).
This school of thought posits that AVGO has a weak valuation and overvalued PEG ratio despite strong growth.
This is however a general market problem and many analysts believe that the stock will progress with its upward mobility in the coming 12 months at a substantial rate.
AVGO Stock Price Chart
AVGO is currently down today by -1.23 %, trading at $578.9 a share compared to its previous day’s closing price of $597 a share.
We can see as depicted from the chart above that AVGO is generally moving up with the occasional downturns.
This is due to the prolonged correction that has sent virtually major every stock plummeting.
This is a nominal decline compared to other major market players that are a little more in the red.
AVGO has traded at a 52-week range of $419-677 a share.
- The average volume of traded shares is about 2,769,485.
- AVGO’s market capitalization is estimated to be $239.943 billion at the moment.
- It has a PE ratio of 38.57 and EPS of 15.00 ($8.39).
Is $AVGO stock a good long term investment?
This data translates that Investors generally believe in AVGO potential.
It is a strong buy-and-hold, although it won’t be spared from the wrath of volatility and market sentiments.
The prices will likely rise at a nominal rate (in a sound market) and fall at a nominal rate in case of a recession.
If the tech stock bubble continues (now at peak) and rates are kept artificially low, at near-zero or even negative as it has been witnessed, AVGO and other stocks will skyrocket.
It has, however, maintained a steady growth rate over the past seven years that is almost unparalleled.
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