I like this industry in general. I think they have a very bright future with the growth of technology and personal computing around the world. I don’t see this market decline or even holding steady any time soon. You would do well to be investing in stocks in this sector.
One of the stocks that have seen the biggest boost as of late is Mellanox Technologies, Ltd. They are a semiconductor company that has connectivity products for servers and other network systems. I think based on their current earnings growth trend, they may be slightly overvalued.
They are trading at an extremely high earnings multiple of 298. Since we haven’t seen extreme earnings growth in this company, I don’t really see this as a rational valuation. Sales have been growing for the past few years, but not by that much.
What I do like about this company is that they are paying down long term debt and increasing their cash reserves. This is giving them the liquidity to invest in expansion. Again, I don’t know that this will cause that much of a significant growth.
Tags: investing in stocks