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Buy Marvell Technology Group (MRVL)

Marvell Technology Group (MRVL) is in the right markets at the right time. (For more on what those markets are see my post )

 Storage has always been the company’s core business—and it still makes up about 50% of its revenues. That’s projected as a hot sector in fiscal 2011 (The company’s 2011 fiscal year begins with the April quarter.) with revenue growth for the company forecast at 18% year-over-year by Kaufman Brothers. That’s above projected 12% to 15% growth in PC units sold for 2010, a result of the company’s continued gains in market share.

But as good as prospects for that business are, it’s growth in sales of embedded chips to the producers of consumer products from cell phone handsets to eBooks, and net books that make the stock a buy now. The company’s new Armada family of ART-based processors for smart phones, smart books, embedded devices, and displays is just starting to contribute to growth. In fiscal 2011 Kaufman Brothers projects that revenue in the mobile/wireless unit will grow by more than 20%. (Marvell Technology Group acquired Intel’s (INTC) communications and application processor business for $600 million in cash in November 2006.)

The Wall Street consensus projects that earnings will climb 45% to $1.09 a share in fiscal 2011. I think that’s likely to be low, but in any case the consensus estimate says the stock is now trading at 18.4 times fiscal 2011 earnings per share. As of January 19, 2010, I’m adding Marvell Technology Group to Jubak’s Picks with a target price of $26 a share by December 2010.

Full disclosure: I will buy shares of Marvell Technology Group for my personal portfolio three days after this is posted.