Why Broadcom Inc. (NASDAQ:AVGO) Could Be Worth Watching

Today we're going to take a look at the well-established Broadcom Inc. (NASDAQ:AVGO). The company's stock maintained its current share price over the past couple of month on the NASDAQGS, with a relatively tight range of US$466 to US$510. However, does this price actually reflect the true value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Broadcom’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Broadcom

What's the opportunity in Broadcom?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.19% above my intrinsic value, which means if you buy Broadcom today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $452.34, there’s only an insignificant downside when the price falls to its real value. In addition to this, Broadcom has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Broadcom look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Broadcom's earnings over the next few years are expected to increase by 58%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in AVGO’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on AVGO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 3 warning signs for Broadcom you should know about.

If you are no longer interested in Broadcom, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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