Broadcom (AVGO)

(A Top Pick Sep 28/20, Up 19%) New 3-year deal with Apple. A core holding for him.

Work from home triggered computer purchases, needing more semiconductors. 5G will also require semis, as well as vehicles and fridges. Semi outlook is wonderful. Intel is the only one that's struggling. He owns Broadcom, as they manufacture a lot of different components. Extremely well managed.

Great company, great stock. Has a big piece of consumer products through Apple. Continue to hold. Likes the story a lot.

All semis can get a big boost from a Biden win, because he will will likely relax US-China trade tensions which pressured markets during Trump's term. This and Nvidia are trying to do takeovers that require the permission of the Chinese government. Broadcom's CEO is very acquisitive, but ever since the trade war, China has made these deals very hard, while Washington treats AVGO as it it's too close to the Chinese government. So, without the trade war, AVGO can return to big deals.

More inclined to play the semiconductor group as a whole, through the SMH, which gives you broader diversification. A more broad-based name would be Texas Instruments. In this environment, take some money off the table and move to the telecom names that have lagged a little bit, like Verizon, BCE or Rogers.

They sell chips to cell phone-makers (Apply is a big customer) and infrastructure and data centres (cloud services rent these centres). Recently, they're selling infrastructure software after buying Symantec. That's a shift in strategy. They've grown cash flow in 5 years exponentially. Rumour is they'll sell their chip business to phone, which would make them a pure play on those data centres, which is a good strategy. Trades a good valuation, pays a 4% dividend and tons of free cash flow. (Analysts’ price target is $349.24)

He likes their dividend growth, but they grow by acquisition, therefore carry debt. When credit spreads blow out, it'll become tougher for them to do deals--and there are fewer deals for them to do now. Other semis that pay a dividend, though lower, are growing, and are in 5G are Xilinx and NVIDIA.