Marvell Technology Group (MRVL -2.30%) has got off to a muted start in 2018, as shares of the chipmaker have lagged the broader semiconductor index so far. But it won't be surprising if it eventually steps on the gas thanks to all-around improvements in its business, which are evident from its latest quarterly performance.

Let's take a look at what's working for Marvell and why it could be a good stock pick for investors looking for growth at a reasonable valuation.

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Marvell's turnaround has finally arrived

Investors waiting for a turnaround at Marvell should be quite happy with its latest quarterly report. The company's revenue shot up almost 9% year over year to $615.4 million in the fourth quarter, helping the company get back into the black. More specifically, Marvell's net income came in at $48 million last quarter as compared to a loss of $80 million in the prior-year period, on a GAAP basis.

After adjusting for one-time expenses, Marvell saw a 40% increase in net income to $164.7 million, or $0.32 per share. The were ahead of Wall Street's expectations, as analysts were originally looking for earnings of $0.31 per share on revenue of $611 million. What's more, the company's guidance for the ongoing quarter indicates that its momentum is going to continue.

Marvell expects $600 million in first-quarter revenue at the mid-point of its guidance range, while non-GAAP earnings are expected at $0.31 per share. This compares favorably to the year-ago quarter's earnings of $0.01 a share on revenue of $541 million. By comparison, the chipmaker's revenue was down 12% year over year during the same period last year.

So the comeback looks good. More importantly, the company should be able to sustain its momentum thanks to the solid catalysts it enjoys across different verticals.

What's working for Marvell?

The storage business supplies 53% of Marvell's revenue, and it has played an instrumental role in the company's turnaround. Revenue from this business increased 4% year over year last quarter, driven by the strong demand for the company's solid-state drive (SSD) controllers. As it turns out, SSD controllers accounted for almost 30% of the company's storage revenue last year.

Looking ahead, it won't be surprising if SSDs play a greater role in Marvell's top-line performance thanks to the massive growth potential of this market. IDC estimates that worldwide SSD shipments will increase at a compound annual growth rate (CAGR) of 15.1% through 2021 thanks to their growing adoption in PCs, tablets, and enterprise applications such as data centers.

Marvell seems well-placed to tap this opportunity as it has a variety of SSD controllers to tap all corners of this market. But this isn't the only catalyst that Marvell enjoys. The company's connectivity business, for example, has hit critical mass of late. Revenue from this segment shot up 31% year over year last quarter, driven by the increasing adoption of its connectivity chips in fast-growing areas such as automotive.

For instance, Marvell had launched an integrated Wi-Fi, Bluetooth, and 802.11p connectivity chip in June last year to target automotive applications. At that time, the company claimed that it was the first automotive-grade system-on-chip (SoC) to integrate Bluetooth, Wi-Fi, vehicle-to-vehicle connectivity, and vehicle-to-infrastructure connectivity on a single platform.

This chip platform went into production last quarter and seems to have played a key role in boosting Marvell's connectivity business. The good part is that there's a lot of room for growth in this space. For instance, the vehicle-to-vehicle connectivity market is expected to clock a CAGR of 73% through 2025, according to Coherent Market Insights.

In all, the storage and connectivity businesses account for two-thirds of Marvell's total revenue, and the bright prospects in these markets will positively impact the company's performance in the long run.

Attractive valuation

Marvell is sitting on solid long-term catalysts, but the company's valuation makes it even more desirable. The stock has a price-to-earnings (P/E) ratio of 23.8, which is significantly lower than the industry average of 37. What's more, Marvell gets cheaper on a forward earnings basis with an earnings multiple of just 18 as its bottom-line line growth is expected to accelerate.

Analysts expect Marvell's bottom line to grow at an annual pace of 22% over the next five years, which is in stark contrast to the 7.5% annual decline in its bottom line over the past five years. All of this makes Marvell Technology Group a good stock pick.