InterDigital, Inc. (IDCC)

No debt and a lot of cash on the balance sheet. 1000 patents, huge revenue growth expected in the next several years. Great Value Play.

IDCC (InterDigital Inc.)
InterDigital is a technology vendor to cell phone companies, along with other devices that use IEEE wireless communication, and license out the patents they have to these customers. They have over 3,000 patents, with nearly 9,000 more in process. This is a huge growth area as according to their last conference call, wireless data traffic is expected to grow ten-fold over the next 5 years (think youtube videos on cellphones). They are working on developing solutions for the bandwidth crunch that is happening.

This past quarter they grew revenues a full 37%, and earnings by 232%! Since they are indeed highly profitable, you would think a high premium would have to be paid for this type of growth along with their vast portfolio of patents. Fortunately this is not so. This stock is trading at 19 times trailing earnings and just 7 times forward estimates! Analyst have been bumping up their estimates over the past 90 days, and are predicting an average of 21% per annum growth for the next 5 years. If they are even close with these estimates, this stock is not going to be trading at just 7 times those earnings.

Furthermore, this company is SOOO ridiculously cheap because on their $957 million market cap, they have $430 million in cash and virtually no debt! Management has already proven they are shareholder friendly since in March they authorized a $100 million stock buyback and have purchased about a million shares already with this.

Listen to the conference call that happened on October 29th. About 4/5ths the way through it gets funny, and then real serious. The analyst's first words are "oh sh*it" as he thought he was disconnected from the call, then later... well, lets just say it's not the last time you'll hear the word "sh*it!" or "my God!") in the CC. He makes some great points on how ridiculously cheap this company is and that management should be spending everything they can on repurchasing as much as this company as they can vs. earning a measly 0.5% to 1% on their cash holdings.

RK