It goes without saying that one secular trend of the globalization era is broadband and mobile connectivity. Moreover, don't let the world's current economic doldrums fool you: the U.S. and global recessions have merely slowed, not eliminated, the expansion of mobile technology use, which is why I'm Reiterating my Buy rating for Broadcom Corp. (NASDAQ: BRCM), first recommended on June 8, 2009 at a price of $25.82.
Broadcom's FY2009 revenue performance will be poor: probably down 6-9%, but institutional investors have shrugged that off. These large investors are looking at FY2010, during which recent design improvements in digital t.v., Bluetooth, Wireless LAN, and other mobile handset products should drive market share gains, as consumer demand recovers, particularly in the Asia-Pacific region. The First Call FY2009/FY2010 EPS estimates for BRCM are 97 cents to $1.41.
The above is a major reason BRCM stock chart looks fantastic, technically: a steady uptrend, with minor, constructive pull-backs, and a price that continually stays above the 50-day moving average - a sign that institutional investors are adding to their BRCM positions.
Stock Analysis: Broadcom Corp. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in BRCM now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your BRCM position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $11.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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