Broadcom Corporation (NASDAQ: BRCM) is a stock that Jim Cramer prefers for the mobile chip growth in smartphones over QUALCOMM Inc. (NASDAQ: BRCM). The growth in millions (or billions) of additional smart devices is part of the attraction here. What Cramer was actually doing on tonight’s MAD MONEY show on CNBC was looking at the “stock value” game because Broadcom Corporation has lagged so many of the beaten down and recently recovering chip stocks. While many chip stocks are now back to within striking distance of 52-week highs, Broadcom is still far behind the pack before and after the Cramer bump higher. After a 3.5% gain today to $33.35, shares were up another 3.1% or so around the $34.40 level in the after-hours trading session.
Broadcom’s 52-week range is $27.59 to $47.39, so you can see just how far off this stock has come from its 52-week highs. Its market capitalization rate is also about $18 billion as of now. The problem with Cramer’s tout here is that he claims to also look for earnings growth. Thomson Reuters has estimates of $2.83 EPS for all of 2011 and $2.75 EPS for all of 2012. It may be cheap at 10-times earnings but that is countered by no earnings growth expected.
The good news is that if chips continue their rebound then it will have been because growth is coming back even sooner than the recent chip stock resurgence is signaling.
Be advised that Broadcom’s recent rally crossed above the 50-day moving average of $31.07 and the 200-day moving average is at $33.82. If the after-hours gains hold up, then Cramer may have successfully beaten the stock chart game.