China Mobile Ltd. (ADR) (CHL), Cisco Systems, Inc. (CSCO), And One Company To Watch

Also, Xilinx is trying its hand in data centers. This is a smart move, and although Xilinx doesn’t derive a major portion of its revenue from data centers yet, it has landed a few design wins which should fuel growth in the future. According to Cisco Systems, Inc. (NASDAQ:CSCO)’s Global Cloud Index report, global data center traffic will quadruple in the next five years. As the world moves to the cloud, construction of data centers and a relationship with Cisco Systems, Inc. (NASDAQ:CSCO) would aid Xilinx, Inc. (NASDAQ:XLNX).

In a rapidly growing cloud environment, presence of a major client such as Cisco Systems, Inc. (NASDAQ:CSCO) is one of the best things that can happen. According to Canalys, the global data center infrastructure market is expected to be worth around $152 billion by 2016 and Cisco would be at the forefront. The networking giant has made consistent advances to fortify its position in cloud computing. It recently acquired SolveDirect, an Austrian company that provides cloud software and services after a series of different acquisitions earlier.

Thus, it won’t be surprising if Xilinx rides Cisco to data center glory going forward. Also, as I’d mentioned earlier, improving trends in Xilinx, Inc. (NASDAQ:XLNX)’s industrial, aerospace & defense are another positive, as the company expects revenue from this segment to rise in the current quarter. Same goes for the broadcast, consumer & automotive business.

The bottom line

Improving economic trends, growth in the communications business, and rapid adoption of new products are expected to be the drivers behind Xilinx’s business. Innovation is one of the primary reasons why investors should like the company apart from the expected growth in earnings. While its trailing P/E looks a bit expensive at 21 times, a forward P/E of 17 suggests that there’s growth ahead. Moreover, a dividend yield of 2.7% is another incentive which might attract you towards this stock.

The article A Solid Semiconductor Stock for Your Portfolio originally appeared on Fool.com and is written by Harsh Chauhan.

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