It is getting harder to find value in the market after the run up of the last few months. Some of my core positions like General Electric (GE) and Bank of America (BAC) have provided a year's worth of returns in a month. However, one stock I have added to recently is Nvidia (NVDA).
Momentum drivers for NVDA:
1. The stock looks like it is in a bottoming process.
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2. Continued growth in smartphones and tablets will aid Nvidia's mobile computing revenues
3. The company just became Needham's favorite large cap chip stock pick.
NVIDIA Corporation - "NVIDIA Corporation provides visual computing, high performance computing, and mobile computing solutions that generate interactive graphics on various devices ranging from tablets and smart phones to notebooks and workstations. It operates in three segments: Graphic Processing Unit (GPU), Professional Solutions Business (PSB), and Consumer Products Business (CPB)" (Business description from Yahoo Finance).
4 reasons NVDA has solid value at under $14 a share:
- The company has a fortress balance sheet with almost $4.50 a share in net cash on the books.
- The stock has a five year projected PEG of under 1 (.92) and sells for just 9 times operating cash flow.
- Nvidia sells in the bottom third of its valuation range based on P/E, P/B, P/CF and P/S.
- The mean analysts' price target on Nvidia is $17.50 and S&P has a $19 price target on the stock.
Disclosure: I am long NVDA.
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