Broadcom is a solid long-term play. In the last 4 months, BRCM has laid a great base to make another run at a new high. We've gone through 2 sterling earnings reports and a stock split and yet the stock has treaded water at 75. Now, earnings growth and p/e are reaching a reasonable alignment (100% YOY growth ttm, and forward p/e of 100). I'm not saying that BRCM is not pricey--it is--but for someone who wants to buy and hold, it's a value compared to even some stalwart companies like Cisco and Dell, not to mention the internuts. I figure it this way: BRCM's earnings estimates are sitting at .59 for FY99 and .79 for FY00. IMO, BRCM is going to get close to hitting the FY00 consensus a year early. It's beaten estimates by 25-30% over the last couple of quarters and has consistently seen sequential quarterly earnings growth. Considering that it already hit .19 this quarter, if it only matches that over the next 3 quarters, we're at .76 for FY99. Salomon's analyst said that the Street is "really" expecting earnings of $1.00 to $1.25 for FY00, though the consensus is sitting at an overly conservative .79. BRCM is seeing real expansion in its earnings, and even if we don't see a corresponding p/e expansion, BRCM should easily break 100 next year.
Doughboy. |
