Tech Stocks to Buy: Ambarella (AMBA)
Ambarella Inc (NASDAQ:AMBA) designs semiconductor processing solutions for automotive cameras. Autonomous and assisted vehicle features such as lane keep assist and collision avoidance depend on cameras, the eyes of the car.
With greater demand for automotive cameras on new cars, Ambarella’s business should thrive. AMBA stock’s designs integrate image processing, HD video and audio onto a single chip.
Ambarella stock trades at 43 times earnings and 19 times forward earnings, and 17 times free cash flow. AMBA stock also trades at 4.4 times book value. Granted, Ambarella stock may not be among the cheapest. But this $1.8 billion-plus company has grown sales and earnings at an impressive rate over the past five years. Analysts also project that Ambarella will grow earnings at a 16.3% CAGR over the next five years.
Ambarella also enjoys liquidity and zero debt.
Also, Ambarella’s 65.3% gross margin suggests a strong competitive advantage. Ambarella’s products are also used for wearable cameras, telepresence, security cameras and unmanned aerial vehicles (UAVs).