Is a Breakout in the Charts for Broadcom (AVGO)?

Broadcom Inc. (AVGO), the combined entity of Broadcom and Avago, boasts a highly diverse product portfolio across an array of end markets. Avago focused primarily on radio frequency filters and amplifiers, while the Broadcom unit designs, develops, and supplies semiconductor and infrastructure software solutions…

Broadcom Inc. (AVGO) has been gaining on continued strength in both its Semiconductor solutions and Infrastructure software segment. In particular, AVGO is seeing robust adoption of Wi-Fi 6 in access gateway and cable DOCSIS 3.1 products. The acceleration in 5G deployment and a production ramp up in radio frequency (RF) should drive growth going forward.

AVGO had $9.5 billion in cash as of the most recent reported quarter, compared with only $278 million. The company also has a gross margin of 59%, which is above the industry average. From a growth standpoint, sales have grown an average of 23.5% over the past five years. Plus, analysts forecast a 26.9% year over year rise in earnings in the current quarter.

The stock appears undervalued based on its forward P/E of 16.26. The stock had been trending higher since last summer, but has shown mixed performance since March as shown in the chart below.

Take a look at the 1-year chart of AVGO below with added notations…

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