Buying good companies on stumbles is a time-tested
strategy, but one that stills carries risk – it’s not always easy to
separate a stumble from a prolonged tumble down the stairs. In the case
of Microchip (MCHP),
while issues related to its recent Microsemi purchase loom larger in
the short term, I’m a little more concerned about the potential impact
of extended lead times and weakening demand in important end-markets.
I
believe Microchip has proven itself to be a well-run chip company, and I
like the company’s diverse capabilities across microcontrollers (or
MCUs) and analog, as well as the new opportunities brought in with the
Microsemi deal (including FPGAs, timing products, data center products,
and so on). Although this may not be the ideal time to buy given
sentiment toward the semiconductor space, the long-term value
proposition makes this a name worth considering for more value-driven
investors.
Continue here:
Microchip Looks Undervalued, But There Are Short-Term Challenges To Consider
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