NVIDIA Corporation (NASDAQ:NVDA) the envy of AMD
Over the past one year a lot of traders have been very bullish on NVIDIA Corporation (NASDAQ:NVDA). This is one company that has gone pretty unscathed despite its leverage in the Personal Computer market. The company is essentially a PC-GPU-centered one and over the past several years, has managed to have very consistent growth.
It is a widely-known fact that the tablet and smartphone market is overtaking the PC market by leaps and bounds. However, the one bright spot for NVDA has been the fact that the gaming PC market has gone untouched. As a matter of fact, it has also managed to grow a shade stronger. In addition to this, though the company does not enjoy a monopoly in the market, AMD is the only competitor it has in this space.
The latter has been consistently losing market share due to the fact that it is unable to dedicate resources to its GPU business. In this space, it has pretty much been fighting a losing battle against Intel. Thus, NVIDIA’s core business remains healthy despite the bleak PC market and at an EV/EBITDA of 6.5x; it doesn’t really seem to be expensive.
In dividend lies strength
However, it has to be understood that cheap cannot be the one and only catalyst. The company is on the borderline of a transformation that tends to get overlooked. This is in its system-on-chip business for mobiles. Over the years NVIDIA has managed to stash away a great deal of cash with very minuscule debt levels.
Right through 2012, both, the analyst and investor community had been haranguing the company about this fact and NVDA has to finally announce its first quarterly cash dividend. Though this is not the one and only reason to invest in this stock, the company will be able to weather storms and hold its own.