Last week’s market selloff was heavy on tech. Given how tech stocks tend to outperform the market, their underperformance in a selloff makes sense. Investors patient enough to wait for a 10-20% pullback in industry-leading tech stocks are often rewarded for their performance afterwards.
Getting a reasonable entry price on a high-growth stock can lead to better returns than just buying at the top, or just holding indefinitely.
With last week’s selloff hitting the chip space rather hard, semiconductor stocks might be near an entry point for aggressive buyers.
Currently, the chip stock with the top investor sentiment is Broadcom (AVGO). Given their diversified mix of semiconductor devices, it’s easy to see why.
Currently, Broadcom shares are up about 75% over the past year, lagging some of the other big chip names. But with earnings soaring by 173%, there’s more room to run, making this an ideal chip stock to buy during market dips.
Action to take: Investors may like a small position here, and should keep an eye out to buy more shares following any 15% drop from a recent high. At current prices, Broadcom also pays a 1.3% dividend.
For traders, the January 2025 $200 calls, last trading for about $6.20, could see mid-to-high double-digit returns through the end of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.