Seagate Technology PLC (STX), Western Digital Corp (WDC): Buying Marvell Technology Group Ltd. (MRVL) After Its Recent Drop Makes Sense

Last month, Seagate Technology PLC (NASDAQ:STX) introduced the Seagate Enterprise Turbo SSHD, the “industry’s first enterprise-class solid-state hybrid drive (SSHD)” according to the company. The company further states that this drive will deliver three times the speed of a conventional hard drive while being twice as fast than a 2.5-inch hard drive at a slightly higher cost.

So, it is not surprising that Marvell’s biggest end market grew 8% sequentially in the previous quarter even though the PC market is not in the best of health. Moreover, Marvell’s mobile and wireless business is witnessing solid growth and it grew 30% on a sequential basis in the previous quarter.

Don’t ignore these
Accounting for 22% of overall revenue in the previous quarter, Marvell’s mobile business is growing along with important customers such as Samsung and China Mobile. According to Marvell, its 3G solution is being used by several OEMs, and Marvell is also developing its 4G LTE solution, which it expects to gain traction going forward.

So, even though Marvell experienced a slight slowdown in its networking business due to inconsistent order patterns from certain customers for passive optical networks, the long-term picture looks good. The passive optical network market is expected to grow at an annual rate of 23% until 2016, according to TechNavio, which bodes well for Marvell.

Final words
Finally, Marvell has a diversified business — another good reason why investors should stick to the stock and not be deterred by the weakness in just one segment, which is expected to get better in the future. The trailing P/E of 27 times looks expensive, but Marvell has been turning around and investors might consider adding to their long positions after the recent drop.

The article Buying Marvell Technology After Its Recent Drop Makes Sense originally appeared on Fool.com and is written by Harsh Chauhan.

Harsh Chauhan has no position in any stocks mentioned. The Motley Fool owns shares of Western Digital.

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