The Semiconductor Shortage Remains Profitable… Consider This Winner

While some tech CEOs have warned that a shortage of semiconductors could continue to impact a number of industries through the end of 2022, many companies in the space are seeing favorable business conditions as a result.

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  • That’s been seen in recent company announcements in the sector and is now even starting to percolate into company earnings. The latest firm? Marvell Technology (MRVL), which reported a solid quarter and issued strong guidance for the second quarter.

    The company topped $1 billion in quarterly revenue for the first time in its history, far exceeding analyst expectations of $841 million. The company also closed on its latest acquisition in the most recent quarter, which already seems to be benefitting the bottom line.

    Shares have just slightly beaten the S&P 500 over the past year, but could start to outperform from here as the company returns to profitability.

    Action to take: Even with a post-earnings bounce to the $50 range, shares are still about 10 percent off their 52-week high. Investors may like shares, although the current dividend yield is a bit low at 0.5 percent.

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  • For options traders, a bet on a run back to the old 52-week high is possible. The August $55 calls, going for about $1.15, look like a reasonable trade here. Look for mid-to-high double-digit profits, and look to close the trade well before expiration or on a sign that a renewed rally in shares may die out.


    Disclosure: The author of this article has no position in the stock mentioned here, but may make a trade this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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