Edmund Shing explains why you should invest in British multinational ARM.
1) FTSE 100 company
ARM is a FTSE 100 company (UK code: ARM) in the technology sector.
2) Tech world leader
It is a semiconductor design company, designing low power microprocessor brains that go inside over 95%* of the world's smartphones, be they Apple iPhones or Android smartphones. They are thus a world leader at this.
3) High growth
ARM are a high growth company, because as the number of smartphones used grow, their sales grow as well because they're making so many designs for so many phones. They also have a high profitability level because they only design the chips, rather than make them. ARM licenses out the designs for chip companies such as Qualcomm to make them.
4) High profit
The company is very exposed to Pound Sterling, meaning that the weaker Sterling gets the better for ARM because the majority of their sales are either done in the US or Asia with transactions in US Dollars. So the weaker the pound, the higher the profits.
Sterling has suffered in the wake of a referendum being announced on whether Britain will remain in the European Union. Expect Brexit fears to continue to hamper Sterling in the near future before the 23 June referendum.
5) Promising broker price target
ARM is not a cheap company, but you can't ignore the fact it is a world leader in the UK at what it does. With the 902p current share price there is a 16% upside to the average broker price target.
*The video above incorrectly reports ARM's share as 60%.
Edmund Shing is Global Head of Equity Derivative Strategy at BNP Paribas in London. He holds a PhD in Artificial Intelligence.