One thing we have discussed at length during the sell-off that started the first of the year is that indiscriminate selling leads to everything being sold, even if there is absolutely no reason for it. Panic leads to margin calls, which lead to flights to safety, which usually proves to be flights to more losses. Of course, super-high flyers with zero earnings get hit. Tesla Motors is down over $110 per share from highs printed just last summer, and with good reason —it has not made any money yet.
A new report from RBC points out that the indiscriminate selling mentioned above has hammered stocks with outstanding forward expectations. The analysts ran a screen and provided a list of the 40 stocks with the greatest disparity between three-month change in forward expectations and price performance. We found three that look very compelling now.
Broadcom
The former Avago Technologies made big headlines last year with a blockbuster buyout of chip giant Broadcom, and it is down a stunning 16% since the end of last year. Broadcom Ltd. (NASDAQ: AVGO) was originally a part of Hewlett-Packard and gets a huge chunk of its business from Apple and Samsung.
The new Broadcom is a big provider in the cloud/hyperscale data center and networking sector. In fact, the company recently announced it will demonstrate its latest optical transceiver technologies for next generation data center and enterprise storage applications. As data center networks transition to 100G speeds to support higher bandwidth demands, technical challenges emerge across various levels of the network from storage endpoints to servers to top-of-rack and core switches.
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