Is InvenSense Still a Buy?

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics around the investing world.

Despite the exit of its CEO and the reduction of its third-quarter revenue guidance, InvenSense is still a buy. InvenSense designs motion sensors for smartphones, tablets, and video-game consoles. Devices using Google's Android operating system use its chips, and Nintendo is a big customer, too. There's plenty of competition from companies such as ST Microelectronics, MEMSIC, and Analog Devices, but InvenSense continues to grow fast. And the reason is that customers prefer its low-power, small-form-factor chips. The company continues to win new customers, especially Chinese handset makers, and the rumor that Apple will become a customer is gaining traction again.

Here's what makes InvenSense attractive. The company trades for only 17 times 2012 earnings, even though sales are growing at 35% and earnings are growing at 26%. The market remains leery in the short term, and that creates opportunity for long-term investors.

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David Meier owns shares of InvenSense. John Reeves owns shares of Google. The Motley Fool owns shares of Google and InvenSense. Motley Fool newsletter services recommend Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 31, 2012, at 1:00 AM, LatrinaCleanola wrote:

    I'm own INVN--probably more shares than I should--so I like to see articles that say it's a buy. But it seems like these guys are among the very few writers/bloggers/analysts/or whatever who publish strong positive comments on INVN. When I see the same guys pushing INVN all the time, I start to wonder if they have a hidden agenda. Why aren't there others out there writing positive stuff about INVN?

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