Riddle me this: What do you get when you combine a brilliant business report with an immediate stock-price drop? Answer: a buy-in opportunity.
That's what happened to Atheros Communications
Atheros is going from strength to strength in many markets. One notable growth vector is in Wi-Fi chips for wireless handsets, where Atheros ships chips to a plethora of leading manufacturers including Motorola
Another growth market is in connected home entertainment systems, where next-generation TV sets and current Blu-ray players tend to ship with networking components and features. That's how you get premium content like Netflix
So why, given all of this delicious strength, did Atheros open 7% lower this morning before rebounding? Analysts point to weakness in the PC segment because of several factors: increasing low-end competition from Broadcom
The 10% slowdown in PC-related sales seems perfectly reasonable for a division that pulls in only 28% of Atheros' sales -- and this too shall pass. You see weakness; I see an opportunity to improve and shock the market. Atheros has trailed the S&P 500 index since the first-quarter report, and this paradoxical decline just adds more value to the equation. There is nothing wrong with the business, and good luck finding another stock trading at 11 times forward earnings while sales and non-GAAP profits are more than doubling year over year. This is a world-beater investment opportunity.
I have an "outperform" on Atheros in Motley Fool CAPS, and I'm sticking to that. You can follow in my all-star footsteps by clicking right here.