Committing to the Internet of Things (or IoT) has been a transformative decision for Silicon Labs (SLAB),
as this smallish semiconductor company continues to leverage its broad
wireless capabilities to benefit from the growth in IoT deployments.
These shares are up more than 40% over the past year, and revenue looks
on track to continue high single-digit to low double-digit growth for
some time, pushed along by the strength in IoT, but also aided by
exposure to markets like optical networking and electric vehicles. The
company's recent announcement of the acquisition of Sigma Designs (SIGM) furthers the story, adding another wireless standard and a decent chunk of fast-growing revenue with expense synergies.
Silicon
Labs has performed well relative to expectations, and the shares are
being richly rewarded for the company's above-average revenue growth and
improving margins. While I do expect high single-digit revenue growth
over the long term (including Sigma) and double-digit free cash flow
growth, valuation is definitely in the "bull cycle" part of the range,
and I cannot find enough value to get comfortable with the idea of
buying for my own account.
Read more here:
Silicon Labs Continues To Build On Its Strengths
