Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Qualcomm: Great Growth Stock with Tailwinds

Stock MarketsOct 13, 2021 12:01PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Qualcomm: Great Growth Stock with Tailwinds

I am bullish on Qualcomm (NASDAQ:QCOM). It is the world’s No. 2 supplier of smartphone processors. Selling processors and 5G chipsets is a $16.5-billion annual business for Qualcomm.

This company’s stock is trading at 26.8% discount to its 52-week high of $167.94. (See Analysts’ Top Stocks on TipRanks)

Snapdragon Brand Is Strong

Qualcomm’s market share in smartphone application processors is down to 24%. On the other hand, most high-end and mid-range Android phones and tablets still use Qualcomm’s Snapdragon processors.

Mediatek (MDTKF), the No. 1 company now, sells Dimensity processors, which are usually used inside sub-$300 phones and tablets. Microsoft’s (MSFT) new $700 dual-screen smartphone uses a 5G-enabled Snapdragon 855 System-on-Chip.

Qualcomm’s refusal to challenge Mediatek’s dominance in entry-level smartphone processors is why QCOM has a net income margin of 28.3%. The net income margin of Mediatek is 19.1%.

Higher profitability is preferable over market share numbers. The smartphone application processor industry is expected to become a $38.2-billion business by 2023.

Qualcomm’s foundry partners are TSMC (TSM) and Samsung (KS:005930). There’s no need to worry that Qualcomm might suffer a supply shortage of Snapdragon processors.

Windows 11, Chromebook Tailwinds

The commercial launch of Windows 11 on October 5 is a solid tailwind for Qualcomm’s Snapdragon 7C processors for laptops and desktop computers. The new HP (NYSE:HPQ) 14 Windows 11 laptop is powered by an 8-core Snapdragon 7C Gen 2 processor.

Qualcomm is now selling TPM 2.0-compliant processors for the $161.9-billion personal computer industry. The Snapdragon 7C processor is also used in some Chromebooks. Sales of Chrome OS laptops are growing at 35% CAGR.

Forty million Chromebooks are expected to be sold this year. Many of those would be powered by Qualcomm’s Snapdragon 7C.

Affordable Valuation Ratios

The 14.1% three-month decline of QCOM has made it more affordable. Its forward P/E is only 13.3x, and its TTM Price/Sales is 4.3x. These ratios are much lower than Nvidia’s (NVDA) 44.2x and 23.5x.

The Piotroski F score of QCOM is 7, indicating that it has a robust financial health, and offers excellent investment value.

Wall Street’s Take

The consensus among Wall Street analysts is that TSM is a Strong Buy, based on 10 Buys and three Holds. The average Qualcomm price target is $176.54, implying 43.6% upside potential.

Conclusion

Qualcomm is a good growth stock. Its processors and 5G chipsets are now being sold to PC and smartphone manufacturers.

Disclosure: At the time of publication, Motek Moyen did not have a position in any of the securities mentioned in this article.

​Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Qualcomm: Great Growth Stock with Tailwinds
 

Related Articles

Hope rally turns choppy as hot U.S. inflation looms
Hope rally turns choppy as hot U.S. inflation looms By Reuters - Dec 08, 2021 3

By Tom Westbrook SYDNEY (Reuters) - Stocks rose in choppy trade on Thursday as worries about the economic impact of the Omicron coronavirus variant ebbed but increasing caution...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email