Summary
- Qualcomm has experienced years of bad luck and setbacks that appear to be coming to an end.
- After the coronavirus slowdown is complete, wireless 5G acceptance and product growth should propel results far into the future.
- Qualcomm can be purchased at cheaper than historical valuations, heading into well-above normal operating growth.
- High profit margins, a conservative balance sheet, a large share buyback leveraging upside, and a solid dividend story are worth consideration.
Qualcomm (QCOM) has been busy since 2017, getting its future arranged for faster growth rates. Finally, after years of setbacks and obstacles, Wall Street is expecting a sharp jump in Qualcomm EPS into 2021-22. The owner/manufacturer of many of the patents and semiconductors that make wireless communication possible, Qualcomm is a critical player in the world’s information-technology economy.
Image Source: Gadgets 360 Article
For long-term stockholders, patience may yet prove a virtue! It took several years of fifth-generation (5G) chip research & development for the newest wireless industry standard to become reality. The company spent hundreds of millions in legal fees fending off the Apple (AAPL) licensing and patent disputes between 2017-19. Plus, Qualcomm had to deal with its failed takeover attempt of NXP Semiconductors (NXPI) during 2018. All told, today’s $89 price is not much different than its 2014 high quote around $80. Last but not least, the string of bad luck has been capped by the coronavirus economic shutdown and supply chain problems of 2020, estimated to dent June Q3 sales by 20-30%.
