Broadcom is one of four tech stocks you need to own, this investor says

FSA Valuation Service president Matt Kacur said Broadcom (Broadcom Stock Quote, Chart, News, Analysts, Financials NASDAQ:AVGO) remains a core holding in semiconductors, pointing to its central role in data movement and what he described as an attractive entry point following a recent pullback.

Speaking on BNN Bloomberg’s Market Call on Jan. 6, Kacur said Broadcom belongs among what he called the “four kind of horsemen of the semiconductors,” alongside Nvidia, ASML and Taiwan Semiconductor Manufacturing.

“If you have, I think you should own all four of those,” he said, describing them as dominant players across different parts of the semiconductor supply chain.

Kacur said Broadcom’s niche is the movement of data at speed.

“Nvidia is the kind of the brains, the logic, the mathematics,” he said. “And then you got to move that data as fast as you can and Broadcom is the one that does that. And it’s like the network.”

He added that Broadcom’s financial profile also stands out. Kacur said revenue growth over the past four quarters has averaged about 24%, while return on capital is roughly 41%.

“For a big company like this with big infrastructure too, it’s unbelievable,” he said. “The fundamentals are great.”

Kacur said shares pulled back after the company’s most recent quarter despite beating expectations.

“Some investors expected even more and there’s a pullback,” he said. “So to me, that’s an opportunity.”

Broadcom shares have gained 49.2% over the past 12 months and 670.1% over five years. Of the analysts covering the stock, 56 rate it “Buy,” three “Hold” and none “Sell,” with a consensus price target of US$460.31.

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