Qualcomm, Inc. (NASDAQ:QCOM)

CAPS Rating: 5 out of 5

Develops, manufactures and markets digital wireless telecommunications products and services based on their CDMA technology and other technologies.


Player Avatar Acolin (47.85) Submitted: 12/27/2012 9:03:45 PM : Outperform Start Price: $59.07 QCOM Score: -11.23

Cash In on the Chip Wars, Part Two

Apple’s hot new products, and the chips they use, are dramatically changing the battleground for leading chip designers and manufacturers. In the multi-billion dollar battle going on right now between traditional, established American chip manufacturers and a new, suddenly big British upstart, Qualcomm looks good, Intel doesn’t.
With triple the price, $17 billion upstart ARM looks to be Fool’s speculative trade. Its A6X processor is in the latest iPhones and iPads, both of which lead the markets for smart phones and tablet PCs. Trade this stock for uphill gains, but don’t take your eyes off the ball. Its rich price guarantees volatility ahead.
By comparison, Broadcom is slumping DOWNWARD and Japanese giant, Kyocera’s trend is SIDEWAYS. See part one.

At least Qualcomm (NASDAQ: QCOM) modem chips are in the third-generation LTE iPad, while the fourth-generation model is believed to be sporting a similar second-generation baseband chip as the iPhone 5. Up 12% year-to-date, the $105 billion QCOM earnings are projected to grow 16% in the next five years, fueling a growth P/E ratio of 20 and a Price/Sales (P/S) ratio of 5.55. The widely-held San Diego company even pays a 1.62% dividend. UP 90% from a double-bottom near $32 in 2010, the stock banged its head against a double-top at $68.83-87 in April, but is on track to re-test, and probably take-out, those highs; the long-term EMA is BULLISH. At ½ this pace, QCOM should see $75 in two or three years.

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