“First in, first out” seems to be working out for Maxim (MXIM),
as this diversified chip company chose to make hard decisions earlier
in the cycle that punished growth at the time, but now leaves the
company ahead of many of its peers as the recovery begins. I also like the leverage Maxim has
to multiple growth opportunities, including autos, factory automation,
data centers, and 5G, not to mention a strong margin profile and clean
balance sheet.
Maxim’s beat-and-raise quarter was a
welcome sight, but I am a little concerned about the sustainability of
the outperformance in wireless. Then again, this is hardly a
Maxim-specific issue. The bigger issue for me remains valuation.
Multiples are high across the chip sector, all but demanding
beat-and-raise quarters to sustain, let alone drive, share prices, but
again this is not a Maxim-specific issue. I’d rather own STMicro (STM) at current prices, but Maxim is definitely a name I’d consider on a pullback.
Read more here:
Maxim Among The First To Deliver A Real Recovery, But Expectations Were Already Steep
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