Let’s talk about Synaptics (SYNA).

It's the number one play in touch and fingerprint ID technology, and last year it acquired a Japanese company that’s number one in integrated circuits LCD technology. And 92% of that is mobile business, so this deal will immediately increase the company's addressable market by 150%.

That’s going to strengthen relationships they already have, but also, here’s the really important thing, it’s going to be immediately accretive to non-GAAP earnings. That means they are going to start making money from it from day one.

In the most recent quarter, the company posted record revenue, up 43% for the full year-over-year, 37% for the quarter-over-quarter, and 54% sequentially. Mobile as an overall business was 77% of the total, and we know that’s where you want to be. That’s where the big bucks are. Management is confident enough that they announced a $200 million buyback.

It’s a former high-flying stock, so it had its wings clipped earlier this year, which underscores maybe near-term higher-than-average risk. That might be why 38% of the float is short. I don’t know why the shorters think this thing is going to crash. I think the shorters are making a huge mistake.  

The shares are not expensive, the PEG ratio is 0.80. I hardly ever talk about PE ratios, but for a company like this, at 14, that’s so reasonable.

Technically, a close above $80 should trigger a short squeeze. That’s right, shorts we’re coming after you. Immediately that could lift the stock to $93.

Now let’s talk about Broadcom (BRCM).

You’ve heard me talk about this company before. It’s a legendary company in technology, and everyone knows the name. They began in 1988, when two guys named Henry met each other.

One was a teacher at UCLA, the other his first PHD student - and they formed a business. Then in 1991, they cobbled in $5,000 each to begin Broadcom. They said let’s focus on cable and high-speed networking.

Of course, they survived the tech meltdown, and mostly since then they’ve been firing on all cylinders.

The company focuses on 3 areas:

Home: Broadband communications, cable, consumer electronics, satellite and VOIP

Hand area: Bluetooth and GPS

Infrastructure: Ethernet, switching and security

And execution has been absolutely amazing. So, fiscal year 2015 consensus is now $3.27, a couple months ago it was $2.70. The PEG ratio is less than one, 0.89, the tech company has an 11 PE.

Now in 2000, this was a $166 stock. Right now a close above $40 would be absolutely huge, and send this thing substantially higher.

DISCLOSURES

Broadcom (BRCM)

Owns

Family Owns

Firm Owns

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Banking

CHARLES N N Y N
HITHA N N N N
DANI N N N N
MATT N N N N
KATE N N N N

Synaptics (SYNA)

Owns

Family Owns

Firm Owns

Investment
Banking

CHARLES N N Y N
HITHA N N N N
TRACY N N N N
MATT N N N N
KATE N N N N

 

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Charles Payne is the host of Making Money with Charles Payne (weekdays 6-7 PM/ET). Click here to see more from Charles Payne.