Qualcomm (QCOM)

Qcom banner 20130201

In the realm of mobile communications, it’s clearly a jungle out there. The battle among the major providers is in full gear and profit margins (for most participants) show the impact. Enter Qualcomm (QCOM). QCOM has the #1 market share in application and graphics processing chips and 3G/4G/LTE modems used in smart phones. Let that sink in for a minute.

Qualcomm has revolutionized the mobile phone industry. Through a commitment to research and development and via a wide berth of partnerships with other firms, innovative solutions are built and distributed across the entire wireless industry.

Growth, Profitability, Valuation

The Manifest Investing sales growth forecast for QCOM is 11%. We’re using 33% for the projected net margin. The median P/E for the period 2006-2013 is 16.8×. We’re using 18x for the projected average P/E.

Qcom model 20130131
QCOM Business Model Analysis: The products are literally ubiquitous and although innovation continues (commitment to R&D) Qualcomm is somewhat mature with respect to life cycle … and naturally lower (but still blue chip leadership) growth rates lie ahead.

Qcom profitability 20130201

Qcom pe 20130201

At the time of selection, the stock price is $62.53, the projected annual return is 18-19%. The quality rating is 91.8 (Excellent, Top Shelf) and the financial strength rating is 98 (A++). The company has no debt.

The company is now ranked #38 in the MANIFEST 40 and although a newcomer to our 40 most widely-followed stocks, investors in our community have studied, owned and profited from QCOM over the years.

And we close with an echo of last month’s closing remarks on Atwood Oceanics — only this time we’re talking QCOM: globally diversified and serving a host of wireless companies … feels like a pretty good hedge vs. geo-risk and a little like 1960s Corning, they sold the tubes to all the dueling TV makers. Placing a bet on red, black and green?

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