A number of well known Sarge names will report on Thursday afternoon. I have actually already taken leave of a couple of these names ahead of time. Veeva Systems (VEEV) as the name soared past multiple price targets. Costco (COST) in anger as it became clear during the height of the pandemic that their e-commerce business would not come close to competing in my area with the level of effectiveness displayed by both Amazon (AMZN) and Walmart (WMT) . When running a household during a complete shut down, you need to know that what you order will get there at least within days, or at least weeks, not months after the order date.
Other names, such as Salesforce (CRM) and Zscaler (ZS) , come with interesting stories and I look forward to just what these firms say this evening. Even if negative, I will still believe in those two.
One name however, kind of just sits there on my book. Been there a while, I'm up 20% so Marvell Technology (MRVL) did not hurt me, but I don't write on it much. I think just once after Atif Malik at Citigroup named it the firm's top semiconductor pick back in mid-April, moving it ahead of Nvidia (NVDA) for the same reason that I even got involved in the first place... exposure to what I thought would be an explosion of growth in 5G technology.
One must ask themselves at this point. Is the thesis still in place? Is 20% enough? My $31 target price has already been breached, but not held earlier this week, going into the numbers.
What To Expect
Honestly not much. The consensus of 25 analysts covering the firm is for EPS of $0.14, on revenue of roughly $679 million. In plain English, Wall Street is looking for earnings growth of -12.5% on revenue growth of +2%. The story is this: Marvell is key to the burgeoning 5G story. That means infrastructure build-outs and broad upgrade cycles. That means benefiting from a broad need for corporate America to spend on the data center. That's why we're even here.
Pandemic. Full stop? Is that build-out on schedule? Is that upgrade cycle in the cards as there will almost certainly be some kind of austerity imposed at some point at global, national, regional, corporate, and finally household levels. I mean after this explosion in public (deficit) spending dries up. Unless 5G is key to a "last phase" fiscal package. In other words, this is an unknown. These are unknowns.
Another threat to this firm's welfare would be deteriorating U.S./China relations. No, Marvell is not an American firm. The firm is headquartered in Bermuda. That said, Marvell relies on Chinese customers to provide roughly 50% of the firm's revenue generation. Does this put Marvell in a tough spot? I certainly see that as quite possible.
What I see is a successful breakout of a just under $26 pivot created by a double bottom pattern. Others will also note the successful defense by MRVL of it's own 200 day SMA on multiple occasions. Both are correct. I also see Relative Strength and a daily MACD that are both a little hot for my liking. What does this mean to me?
This means simply, given that my price target is $31, and that I have a full position in the name, that I will be taking at least a third of my long off ahead of the numbers this afternoon. The stock reacts well? I still rung the register. The stock reacts poorly? I can always add the shares back on at a discount having extracted some capital in the meantime.
(Costco, Amazon, Salesforce, Nvidia and Marvell Technology are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)