Embedded chip specialist NXP Semiconductors (NXPI -0.27%) was recently left at the merger altar by larger rival Qualcomm (QCOM 0.10%). After two years of deal-wrangling, the companies never got the last regulatory thumbs-up from Chinese authorities, so Qualcomm threw in the towel and left NXP to develop a long-term strategy as a stand-alone company.

Here's why I think NXP Semiconductors is poised to make a bull run from this fresh starting point.

The pain is already in NXP's rearview mirror

The failed Qualcomm merger hurt NXP investors in two ways.

First, the stock was pinned to Qualcomm's buyout offer for so long that activist investors demanded -- and received -- a higher price. At times, the S&P 500 market-tracker index outperformed NXP's shares even if you included the immediate 19% single-day pop that Qualcomm's original offer triggered. The deal was sucked into international trade politics, stretching out the Chinese approval process until investors simply lost patience.

And of course, NXP's stock plunged several times over as Qualcomm's merger bid ran out of steam. Share prices rose and fell along with the deal's apparent chances of getting that final rubber-stamp approval, and then they took a final 12% tumble in July when Qualcomm walked away.

All told, if you owned NXP shares in September of 2016, your holdings would be worth 12% more today. An S&P 500 index fund returned 33% over the same period. In 2018, NXP investors have suffered a 22% haircut while the broader market marched 8% higher.

One hand giving a thumbs-up and another flashing a thumbs-down sign over the background of a semiconductor wafer.

Image source: Getty Images.

Qualcomm had good reasons for wanting to buy NXP

NXP was an attractive merger target for several reasons. The company is a leader in automotive computing solutions, shipping sensors, processors, and technology packages to more car makers than any other company in that sector. Furthermore, NXP has years of market-leading experience in digital security and authentication products, led by a strong position in near field communications (NFC) chips.

This was the core of Qualcomm's buyout thesis, motivating the company to spend as much as $46.5 billion on the smaller company.

And NXP didn't rest on its laurels while the Qualcomm debacle was percolating. The company has continued to expand its automotive, industrial, and security portfolios. NXP's management expects to grow its top-line revenue 50% faster than its target markets are expanding. In other words, NXP is poised to continue building its market share in several key sectors.

The stock is a great value today

NXP shares are trading at just 18 times the company's trailing free cash flows today, a ratio that would have been low before Qualcomm's buyout process started. The company also received a breakup fee from Qualcomm of a cool $2 billion, which will both help NXP kick its business into a higher operating gear and lower that valuation ratio even further.

The company's share buyback program was put on ice when Qualcomm came a-knocking, but it's now back in business to the tune of a $5 billion authorization. NXP's management and board of directors had also been thinking about a dividend policy until the buyout drama started. That's back on the table, too. Either way, shareholders are sure to receive a generous slice of NXP's excess cash flows in the form of very direct cash returns.

The upshot: This is a great time to buy NXP shares

NXP is such a convincing buy at these prices that I'm voting with my wallet -- I started an NXP position of my own two weeks ago.

The automotive computing opportunity alone would be enough to give NXP a solid business plan far into the future. On top of that, the company is diving deep into the Internet of Things and digital security as a whole. It's easy to see why Qualcomm wanted to buy the whole thing, and the discount prices we see today only add to this stock's long-term value thesis.