To say that Qualcomm (QCOM) has been on a roller coast ride this past year is a tremendous understatement.
Early on in 2019 shares nearly doubled to hit a peak of $90.34 in late April after it announced a settlement with Apple followed by a solid earnings season. Next thing you know shares get whacked all the way back down to the mid $60’s. From there it has been slowly chipping its way higher…but still well off the 52 week peak.
My goal is to dig deeper into the 4 components of their POWR Ratings to see what it tells us about the future potential of these shares.
Buy & Hold Grade = B
Here we are looking at the long term momentum because a stock in motion likely stays in motion when there are positive fundamental catalysts at play (like their recently impressive earnings report). QCOM passes this test with flying colors thanks to a 39.95% return over the past year…well above the market averages. Going back even further we see that shares have gained 60.81% over the past 3 years. This historical strength bodes well as a base for future outperformance.
Trade Grade = A
Under the heading “what have you done for me lately?” QCOM has rallied 37.95% on the year and 11.95% in the past month alone. As shared in the intro commentary it hasn’t been a smooth ride by any stretch. But with the Apple patent issues now behind them it has one less barrier in its way. Yes, the US-China trade talks are still a factor for shares. However, the odds of a peaceful resolution, and removing restrictions from Huawei, are all things that are skewing more positive of late.
Industry Rank = B
Stocks are typically jugged by the company they keep. So it’s important that they are in an attractive industry group. Gladly that is the case with their “Semiconductor & Wireless Chip” group being #30 ranked out of 123 Industries. As noted in the Trade Grade section, the improvements in the US China trade talks has lifted the fortunes of the entire group. On top of that you have the exceptional growth trends for the group given the increasing use of semiconductor chips in just about every device (aka the Internet of Things).
Peer Grade = B
This is a large group with 90 stocks in total. Yet according to our analysis QCOM is the #18th rated stock in the group as it is outperforming most of its peers. You will certainly recognize some of the other companies with higher ratings such as ASML, AVGO and TXN.
POWR Rating = B (Buy)
OK…it came up a notch short of the coveted POWR Rating of A. However, there is no shame in Qualcomm’s game when you appreciate the entirety of how well shares are performing…not just this year, but going back several years.
Its growth prospects are still attractive. Not many companies of its size are still expected to grow earnings by over 25% a year over the next 3-5 years. That is why so many top analysts are still pounding the table on shares like James Faucette of Morgan Stanley with a price target of $95.
The sooner the US China trade deal is finalized, the sooner these shares will be able to capitalize on the exceptional growth potential.
StockNews.com is the home of the POWR Ratings system. Here are some quick links to get you to the most popular POWR Ratings features:
Full List of “A ”Rated Strong Buy Stocks– See all the top rated stocks.
About the POWR Ratings– Learn what’s build inside the POWR Ratings that helps find stocks ready to outperform.
Reitmeister Total Return portfolio. This is where Steve Reitmeister employs his 40 years of investment experience to hand select the best POWR Ratings stocks.
About the Author
Steve Reitmeister is the CEO of the Stock News Network bringing 40 years of experience to help individual investors find outperformance. For the better part of the past two decades he was the Editor-in-Chief of Zacks.com where millions of investors enjoyed his timely market insights. His commentary has also been featured on other leading investment websites including Yahoo Finance, SeekingAlpha, CNNMoney and MarketWatch. Steve has an MBA from DePaul University and B.A. in Economics from the University of Wisconsin (Go Badgers!).
QCOM shares were unchanged in after-hours trading Monday. Year-to-date, QCOM has gained 37.46%, versus a 19.87% rise in the benchmark S&P 500 index during the same period.
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