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Why Beaten Down Broadcom Is Ready to Rebound

Shoshanna Delventhal

Broadcom Ltd. ( AVGO), one of the most high-profile large-cap chip stocks whose shares were badly pummeled during its failed bid for Qualcomm Inc. ( QCOM), has been on a tear over the past month following a period of underperformance. Now, the semiconductor stock is to poised for a rebound that could push up its shares by more than 20% as it boosts stock buybacks and dividends and benefits from a major acquisition, according to a detailed story in Barron's. Thanks to solid demand for its high-margin products used in smartphones, data centers and factories, Barron's Jack Hough expects Broadcom's "hefty free cash flow" to be utilized for dividends and share repurchases. In light of its high dividend, Hough notes that investors are paying just 11 times earnings for Broadcom stock, compared to to the 14 times earnings that investors pay for consumer giant General Mills Inc. ( GIS), with a 4.5% dividend.