Reasons For Broadcom To Be A Long Term Stock To Buy

Chip maker has seen its stock fly by 40% during the past one year against NASDAQ 20% beats EPS estimates six times in a row.

Broadcom Corporation (NASDAQ:BRCM) seems like a nice bet to buy its stock for the long run. The semiconductor solutions provider stock price has performed  better than NASDAQ (40% against 20%) during the past one year, and has also beaten past the EPS six times consecutively, and nine out of ten times in the past, as illustrated by the first quarter results. Segment revenue was reported growing at 11% year-to-year to clock in at more than $2 billion. 

According to researcher, Susan Eustis, the LTE wireless market size reaches around less than $80 billion. She points to the fact that everything is moving towards the mobile field, which is driven by the wave of smartphones that are becoming cheaper and more easily accessible among the worldwide population. This, in turn, is driving universal connectivity as well.

In fact, based on a study by Statista, there are currently around 1 billion HSPA and over 60 million LTE mobile network subscribers around the world. By 2018, they are expected to increase to around 1.35 billion subscribers. This growth potential is expected to drive Broadcom’s LTE and TDS CDMA solutions for the next five years. Right now, there is a very big market for LTE subscriptions existing in China, with local telecom provider, China Mobile, taking full advantage of the boom. However, there is still a lot of room for them to grow there, so it looks like an ideal time for Broadcom to invest there.

On top of this, there is an ongoing activity concerning the next generation Internet of Things, something that the Information Technology giant, Qualcomm, is currently leading. Broadcom is catching up though, having shipped a substantial number of WICED development kit, a complete package of hardware and software based solutions for prototyping IoT products.

Similarly, mobile broadband is also booming, with forecasters expecting a CAGR of 16% growth over the next five years. Most of the growth will come over from the emerging markets, which are starting from a low base, and expecting to catch up fast. Once it happens, it will provide a boon for companies to market their products and services online to gain more access to consumers while earning supplemental income from advertising.

In addition to the aforementioned points, the company has a dividend yield of over 1.30% and a healthy cash flow that will help to sustain its dividend for the future.
Broadcom Corporation stock price ended the day at $27.25, down 1.05% from the previous day.