Broadcom Could Present Value ETF Investors with an Opportunity

Semiconductor company Broadcom could head into 2020 with a value-oriented play that could give bargain bin-hunting ETF investors an opportunity to consider—leveraged and unleveraged. With companies like Apple and Samsung utilizing Broadcom chips, the company is poised for growth that goes beyond its current value.

“In the fiscal third quarter of 2019 (ended in August), Broadcom’s networking vertical performed well due to strong demand from the switching and routing platforms,” Aditya Raghunath wrote in Motley Fool. “However, it’s the wireless business that’s expected to be a key revenue driver in the upcoming quarters, thanks to strong demand for Apple’s new iPhones.”

“Broadcom’s wireless segment provides chips for several smartphone manufacturers, including Apple and Samsung,” Raghunath added. “That said, less than impressive iPhone sales have also hurt wireless revenue in the last few quarters, but Apple will also be launching a highly anticipated, 5G-enabled iPhone next year, so Broadcom can be bullish on two solid years of sales in the wireless business.”

ETFs to consider with Broadcom exposure:

1. ProShares Ultra Semiconductors (NYSEArca: USD): seeks daily investment results that correspond to two times (2x) the daily performance of the Dow Jones U.S. SemiconductorsSM Index. The fund invests in financial instruments that ProShare Advisors believes, in combination, should produce daily returns consistent with the fund’s investment objective. The index measures the performance of certain companies in the semiconductor sub-sector of the U.S. equity market. Component companies are engaged in the production of semiconductors and other integrated chips, as well as other related products such as semiconductor capital equipment and mother-boards.
2. iShares PHLX Semiconductor ETF (NasdaqGS: SOXX): seeks daily investment results that correspond to two times (2x) the daily performance of the Dow Jones U.S. SemiconductorsSM Index. The fund invests in financial instruments that ProShare Advisors believes, in combination, should produce daily returns consistent with the fund’s investment objective. The index measures the performance of certain companies in the semiconductor sub-sector of the U.S. equity market. Component companies are engaged in the production of semiconductors and other integrated chips, as well as other related products such as semiconductor capital equipment and mother-boards.
3. First Trust NASDAQ Cybersecurity ETF (NasdaqGS: CIBR): seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the Nasdaq CTA Cybersecurity IndexSM (the “index”). The fund will normally invest at least 90% of its net assets (including investment borrowings) in the common stocks and depositary receipts that comprise the index. The index includes securities of companies classified as “cyber security” companies by the CTA.

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