Marvell Technology Group Ltd. (MRVL): One of Tech’s Most Unloved Growth Stocks

Page 1 of 2

The phrase, “catching a falling knife” is overused for bear arguments. Whenever a company’s stock price crashes and bargain hunters swoop in for the deals, investing threads are flooded with the adage. Of course, sometimes it’s appropriate, but largely it is a hyperbolic statement. For Marvell Technology Group Ltd. (NASDAQ:MRVL), the pall cast by being associated with the dying PC industry has left the company with a depressed market value that fails to accurately account for the direction of the company. While it may be unfortunate in the short term for the company’s shareholders, Marvell Technology Group Ltd. (NASDAQ:MRVL) presents an attractive buy opportunity for the far-sighted.

A history of doing just fine
Marvell Technology (MRVL)Investors and analysts sometimes seem to forget that being a technology company involves a constant cycle of innovation and irrelevance. It’s a fast-moving industry, and the successful players find ways over time of reinventing the company to address current and future trends. The death of the PC is a popular trope these days, and for good reason, but it has dragged down the value and image of perfectly good companies.

Of course, we can point to giants that fell behind in innovation — Microsoft Corporation (NASDAQ:MSFT), Hewlett-Packard Company (NYSE:HPQ), maybe Apple Inc. (NASDAQ:AAPL) in five years. The thing is, it is not inherently bad to have been a major player in a technology that is being eclipsed — as long as you keep moving forward. I believe that is what semiconductor maker Marvell Technology Group Ltd. (NASDAQ:MRVL) is doing, while the market values it as a retiring dinosaur.

This PC-ocalypse has been in the making for at least five years (if not 10). If Marvell was to die with the PC, it would make sense for its long-term earnings growth to decline. But, over the past five years, Marvell has grown roughly 10.6% on an annualized basis. On the ever-important cash-flow front, that five-year number goes to 13.6%. The company continued making money on its product lineup for as long as it could, and now that product cycle is shifting out and making room for the next. This creates a short-term earnings (and price) dip, before the next round begins.

What’s on tap
Admittedly, Marvell is coming off a tough year. On an annual basis, net income took a bath, sinking 50% to just $304 million. The top line wasn’t as devastating, with revenue down just 7% over the prior year. The company ended 2012 with a lawsuit loss to Carnegie Mellon University, which alleged that Marvell infringed upon two of the school’s patents. The judge ordered a $1.1 billion penalty, but analysts are quick to point out that Marvell’s manufacture, distribution, and sale of products in question takes place almost exclusively outside of the United States. Hedge fund guru David Einhorn strongly believes this fee will be reduced substantially, or eliminated all together.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!