Unstoppable of Semiconductors
Semiconductors industry had been a hot pick for the recent year, and among the semiconductor’s counter, I am particularly paying attention to $Broadcom(AVGO.US$. I will briefly go through why I picked $Broadcom(AVGO.US$ to be the next counter to hit historical high from the perspective of Microeconomic, Fundamental Analysis and Technical Analysis.
1. Microeconomic
-Global semiconductors industry is doing well due to the high demand for chips. The advancement of technology devices from $Apple(AAPL.US$ , $NVIDIA(NVDA.US$ require higher performance chips to engine. Major semiconductor players such as $Taiwan Semiconductor(TSM.US$, $Advanced Micro Devices(AMD.US$ and $Qualcomm(QCOM.US$ delivered outstanding earning reports.
-Global semiconductors industry is doing well due to the high demand for chips. The advancement of technology devices from $Apple(AAPL.US$ , $NVIDIA(NVDA.US$ require higher performance chips to engine. Major semiconductor players such as $Taiwan Semiconductor(TSM.US$, $Advanced Micro Devices(AMD.US$ and $Qualcomm(QCOM.US$ delivered outstanding earning reports.
-From the chart we can see that the PHLX Semiconductor Stock Index hit all time high at $3420 yesterday. We can see Higher Low being formed on PHLX’s chart and finally it breakout and hit historical high.
2. Fundamental Analysis
You can check on my previous post on how to quick study the financial reports, and if you prefer chart’s type report, MooMoo had done the brilliant work for you which is super convenient to quickly go through a company’s report!!!
Here I used $Broadcom(AVGO.US$ as reference:
First, search for the company you wish to study and click in. On top of the bar, you can see Quotes, Comments, News, Analyses, Options, Financial and Summary. Swipe to left and click the “Financial” tab.
i. Revenue Composition (Business): Where does the revenue came from and what are the ratio of contribution.
ii. Revenue Composition (Region): Which regions contribute the revenue and the ratio.
iii. Key Indicator: There are 8 indicators here which are EPS, FCF, Current Ratio, Quick Ratio, ROE, ROA, Gross Margin, Net Margin.
- EPS: Earning Per Share. How much a share get from company’s profit. The more the better.
- FCF: Free Cash Flow. Net income after deduct all expenses and taxes. The more the better.
- Current Ratio: Current Liabilities/Current Asset. Ratio of liabilities to assets. The less the better.
- Quick Ratio: Company's capacity to pay its current liabilities without needing to sell its inventory or obtain additional financing. The more the better.
- Quick Ratio: Company's capacity to pay its current liabilities without needing to sell its inventory or obtain additional financing. The more the better.
- ROE: Return on Equity. Net income/shareholders equity. The more the better.
- ROA: Return on Assets. How much money a company earns by putting its assets to use. The more the better.
- Gross margin: (Net sales - Cost of sales)/Net sales. Profit margin before taxes. The more the better.
- Net margin: Net profit margin after deduct taxes. The more the better.
iv. Stock Compare: You can compare up to 3 counters for their financial indicators. This is super useful!!!
v. Financial Estimates: Estimation of EPS, Revenue and EBIT (Earnings Before Interest & Taxes). Here we can see 2 lines, blue and orange. Blue is actual value while orange is estimated value. If blue line is higher than orange line means they are perform beyond expectation.
vi. Income Statement: Revenue (before deduct cost of sales), Operating Income (after deduct cost of sales), Net Income (after deduct cost of sales and taxes). $Broadcom(AVGO.US$ net income is historical high of nearly $1500M!!!
vii. Balance Sheet: Assets, Liabilities and Current Ratio. Pretty straightforward here as the current ratio of $Broadcom(AVGO.US$ is reducing for the past 5 quarters meaning that their liabilities is lesser which is good for the company.
iix. Cash Flow Statement: There are CFO (Cash Flow from Operating Activities), CFI (Cash Flow from Investing Activities) and CFF (Cash Flow from Financing Activities). We can see the CFO of Broadcom hit the highest at $3.57B for the latest 5 quarters because their earnings are increasing!! Wow!!!
As summary, Broadcom’s net income and CFO hit historical high, at the same time their liabilities is reducing. Additionally, Broadcom estimate their third quarter revenue guidance of approximately $6.75 billion, an expected increase of 16% from the prior year period which is positive too. (Full reading is here).
So their fundamental is good, now let’s go to
3. Technical part
As from the chart above, we can see that Broadcom had been moving in a sideway direction since January 2021. It has a long term support of $421, short term support of $459 and resistance at $488, with historical high at $495 on 19th Feb 2021. The latest closing price stood at $484.68 with high of $494.60 which is very close to the historical high!!!![]()
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With the good atmosphere in semiconductor industry, together with solid fundamental and attempting to break resistance in technical chart, I believe $Broadcom(AVGO.US$ will break historical high and go over $500 very soon!!!
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102816596 : Thank you for the detailed explanations
102361240 : Im looking at this counter too!!
101530762 : Tqvm
102735546 : Never knew moomoo apps has so much functions
101720633 :
102515678 : How about $Qualcomm (QCOM.US)$?
102281640 :
ZS19OP 102816596: You’re welcome. We learn together here
ZS19OP 102361240: Hahahaha
ZS19OP 101530762: Most welcome
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