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Technology Stocks : Silicon Motion Inc. (SIMO) -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (2595)	10/13/2022 1:04:25 PM
From: Elroy	Respond to of 2978

Yes, one could buy a basket of semiconductor stocks. But it's sort of hard to argue SIMO should be in the basket. If the deal gets rejected, then SIMO likely NEVER gets a market or better still a premium PE valuation. So.....why buy SIMO rather than a semi stock that may get a premium valuation? If SIMO were a US semi company, I think it would trade around 16x rather than 8x-10x, and also I think it would have already been gobbled up by an acquirer. If you put SIMO's decent revenue growth and large profitability and cash flow generation INSIDE of a larger diversified semi stock (such as MXL), then I think the market will value it a lot higher than standalone Taiwanese SIMO. But the way SIMO is trading and with all the US-China political stress, it seems like investors think the deal is unlikely to go through. I don't know, we'll see.