Category Archives: Qualcomm

Is Qualcomm Finally Untethered?

Posted on April 17, 2019 by | Leave a comment

On April 16, 2019, Qualcomm (QCOM) and Apple (AAPL) agreed to settle their ongoing disputes.  The outcome was significant for Qualcomm.

As Charles H. Dow, co-founder of the Wall Street Journal has said:

“The one sure thing in speculation is that values determine prices in the long run. Manipulation is effective temporarily, but the investor establishes price in the end.  The object of all speculation is to foresee coming changes in values. Whoever knows that the value of a stock has run ahead of price and is likely to be sustained can buy that stock with confidence that as its value is recognized by investors, the price will rise (Dow, Charles H. Review and Outlook.  Wall Street Journal. February 25, 1902.)."

For many years, the market price of QCOM appeared to be reflecting the neglect of speculators.  In the meantime, investors slowly and selectively accumulated shares of QCOM in anticipation of the high risk proposition that QCOM would prevail against AAPL.

As seen in our chart below, QCOM has found its share price at the undervalued level several times since 2016.  The September 13, 2018 announcement of the accelerated share buyback seems as though it was at an elevated prices.  However, as our updated 10-Year price target indicates, the prospects for QCOM are far in excess of current levels.

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In many respects, the price of Qualcomm has been at the mercy of Apple and their ongoing lawsuits.  However, Charles H. Dow has the following to say of such conditions:

“The manipulator is all-powerful for a time. He can mark prices up or down. He can mislead investors inducing them to buy when he wishes to sell, and to sell, when he wishes to buy; but manipulation in a stock cannot be permanent, and, in the end, the investor learns the approximate truth. His decision to keep his stock or to sell it then makes a price independent of speculation and, in a large sense, indicative of true value (Dow, Charles H. Review and Outlook.  Wall Street Journal. October 18, 1901.).”

We believe that Apple has played into the hands of value investors and we’re thankful for it.  Now the test becomes whether Qualcomm will realize the overvalued targets that we have set for the stock, as seen here.

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Posted in Charles H. Dow, Dow's Value Theory, qcom, Qualcomm

Qualcomm Inc.

Posted on November 5, 2015 by | Leave a comment

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Posted in downside, Edson Gould, qcom, Qualcomm, speed resistance line, SRL

Nasdaq 100 Watch List: June 8, 2012

Posted on June 10, 2012 by | Leave a comment

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

symbol Name Price P/E EPS Yield P/B % from Low
SYMC Symantec Corporation 14.57 9.28 1.57 - 2.06 2.17%
DELL Dell Inc. 12.12 6.92 1.75 - 2.28 2.71%
CHRW CH Robinson Worldwide Inc. 57.92 21.6 2.68 2.3 7.51 3.65%
EA Electronic Arts Inc. 13.47 58.57 0.23 - 1.75 4.74%
INFY Infosys Ltd. 43.62 14.54 3 1.3 3.81 5.36%
NVDA NVIDIA Corporation 12.12 14.8 0.82 - 1.72 5.67%
GMCR Green Mountain Coffee Roasters 23.13 11.11 2.08 - 1.76 6.25%
EXPD Expeditors Int'l of WA 39.36 22.75 1.73 1.4 3.95 6.49%
CTRP Ctrip.com Int'l 18.66 17.86 1.04 0 2.38 6.63%
SPLS Staples, Inc. 12.86 9.23 1.39 3.4 1.24 7.71%
LRCX Lam Research 37.62 16.65 2.26 - 1.72 8.07%
NFLX Netflix, Inc. 65.64 22.22 2.95 - 5.41 8.14%
WYNN Wynn Resorts Ltd. 104.21 22.1 4.72 1.9 46.53 8.76%
NTAP NetApp, Inc. 30.33 19.2 1.58 - 2.65 9.14%
MCHP Microchip Technology Inc. 32.01 19.4 1.65 4.4 3.08 9.25%
VOD Vodafone Group 26.58 12.6 2.11 7.5 1.1 9.34%
MRVL Marvell Technology 12.28 13.15 0.93 2 1.4 9.35%
ORCL Oracle Corporation 27.16 14.23 1.91 0.9 3.16 9.87%
CTSH Cognizant 58.85 19.81 2.97 - 4.14 9.92%

Watch List Summary

Of interest on our watch list is NVIDIA (NVDA).  According to Yahoo!Finance, “NVIDIA Corporation provides graphics chips for use in smartphones, personal computers (PC), tablets, and professional workstations markets worldwide.”  As we’ve described in the past, we have a strong interest in chip sector stocks and believe that the long-term prospects for companies in the chip industry is very appealing.

NVDA first appeared on our watch list on June 12, 2010.  At that time, NVDA was trading at $11.61.  By February 18, 2011, NVDA was trading as high as $25.68 which was a gain of over +120%.  We’re not certain that NVDA’s decline has ended.  According to Edson Gould’s Speed Resistance Lines, NVDA has already declined below the conservative downside target of $17.87 based on the February 2011 high.  The persistence of the current decline suggests that the stock could decline to the extreme downside target of $8.67.  We’re doing everything we can to hold off buying this stock at the current time.

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Watch List Performance Review

The following is a performance review of the top five Nasdaq 100 Watch List from June 4, 2010.  Keep in mind that this is a 2 year performance review instead of a 1 year review.

Symbol
 Name 2010 2012 % change
GILD Gilead Sciences, Inc. $34.71 49.21 41.77%
SYMC Symantec Corporation $13.92 14.43 3.66%
ERTS Electronic Arts Inc. $15.81 13.07 -17.33%
APOL Apollo Group, Inc. $51.48 32.42 -37.02%
QCOM QUALCOMM $35.30 55.85 58.22%
average 9.86%
NDX Nasdaq 100 1,832.04 2,478.13 35.27%

As can you can see, the list of top five stocks significantly underperformed the Nasdaq 100 (NDX), mainly due to Apple Inc. (AAPL) having an outsized impact on the index.  However, underneath the static 2-year performance data is a story to be told, which is the basis of our New Low investment strategy.

In the chart below, take note of the period around July 2011.  At that time, Qualcomm had gains of +60%, Electronic Arts had gains of +55%, Symantec had gains of +42% and Gilead Sciences had gains of +21%.  Only Apollo Group had losses to compare against the other stocks.

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In the case of Symantec and Electronic Arts, they have come full circle after a 2-year period. This cycle is not unusual for most of the stocks that we track. Even when the stock does not approach the prior low of a watch list, many stocks attain a 52-week low after 2 to 2.5 years (as in the NVDA example above). Be on the lookout for stocks that have similar cycles like EA, SYMC and NVDA since their ability to replicated such moves adds to the prospect that they could pull a repeat performance.

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Posted in apol, EA, electronic arts, GILD, gilead sciences, Nasdaq 100 Watch List, NVDA, Nvidia, qcom, Qualcomm, SYMC

Investment Strategy and Timeline: Qualcomm (QCOM)

Posted on September 30, 2010 by | Leave a comment
Current headlines are all about the latest and greatest gadgets like the Apple iPhone. With the news, traders flock into the stock as well as the derivatives for Apple (AAPL). Analysts recommended Verizon (VZ) over AT&T (T) because of the new growth component, the iPhone. Now the derivative traders are interested in the chip sector with companies like Qualcomm (QCOM). With the latest rumor that Apple will be dropping Infineon / Intel alliance for Qualcomm's CDMA technology, analysts and traders have suddenly fallen in love with QCOM.  With this change in sentiment, Qualcomm has risen almost 18% since September 1st.

The New Low team hasn't always been right in timing the buy but we have been (somewhat) right in suggesting investors look at QCOM back in  the March and April 2010 time frame. The stock appeared on our Nasdaq 100 Watch List on January 30, 2010 at $39.19. Although we didn't recommend the stock then, we tracked the stock for several months. In late March, a reader submitted a Research Request on Applied Material (AMAT) which put us to work.

At the end of that article, we came to a conclusion that AMAT was too rich for our blood and suggested QCOM as a better alternative. In addition, we offered a specific strategy on the purchase and how to allocate capital which panned out beautifully. On April 22, 2010 QCOM dropped like a rock after reporting earnings. With a recent dividend increase of 12% and a good entry point of $38, we took a position in QCOM.

For those that followed suit, they would be sitting on an 18% gain or 48% annualized gain. In addition to buying outright stock, we also incorporated an option strategy as a way to add extra cash. This strategy added 1.2% to our bottom line. In addition, QCOM paid 3 dividend payments during this time adding more to our bottom line.

Today, we have taken our gain.  Although we didn't buy QCOM at the beginning of the rise in September, as we held the stock, we were paid for the wait as the dividend covered the commission.  The option premiums were additional cash we took from speculators. The net return of 18% is more than enough for us to sit back, review our watch list, and wait for a better risk/reward alternative. While QCOM can certainly move to $50, an additional 10%, we can't hope or dream. We are happy to take our 18% gain and head back to the drawing board, our watch list.

Timeline:
1/30/10 - QCOM appeared on our watch list.
3/23/10 - Research Request on AMAT but we suggested QCOM.
4/22/10 - QCOM drop, possible entry point.
4/23/10 - we took position with option strategy.
7/16/10 - options expired, we sat on 3.5% loss.
9/30/10 - we have taken the 18% and go back to our drawing board, the watch list.

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Posted in investment strategy, qcom, Qualcomm

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Qualcomm (QCOM) Dropped After Earnings

Posted on April 22, 2010 by | Leave a comment
Qualcomm (QCOM) tanked 7% today after the company announced their fiscal 2Q earning. The "reason" for the move, despite beating analyst expectations, is because of lower than estimated guidance for the upcoming quarter.
 
Let's take a look at the actual figures to see if we can make sense of this situation. Net income for 2Q10 came in at $0.59 vs. consensus of $0.56. That's 5% above consensus view. Guidance for 3Q10 is between $0.51-0.55, take the average and that is $0.53. The Wall Street expected $0.55. Given the company beat expectations by 5% and offered guidance that is 3% lower than expected ($0.53 vs. $0.55), QCOM shares fell 7%. That doesn't make sense to me.
 
In light of all this, we spoke about Qualcomm in late March 2010, which was only a month back. The action for this stock has been very volatile. With shares dropping 14% after reaffirming guidance to rising 8% after boosting forecast. Volatility, in my view, is great for value-oriented investors who are looking to acquire shares at a discount.
At the end of our March 25th posting, we said "we'd rather not chase it at this point" and we did just that, we stayed on the sideline. But now that Qualcomm is back within 20% of the 52-week low (at little less than $40), we are excited about the shares once again. Our initial model shows a good price to enter at $39 and a bargain price of $25.
 
We believe that you can start researching Qualcomm's viability as a company. With the recent announcement of a dividend increase of 12% and a $3 billion stock buyback program, we like the prospects of this company. – Art

 

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Qualcomm (QCOM) Boosts Forecast

Posted on March 25, 2010 by | Leave a comment
Qualcomm (QCOM) rose as high as 8% today after boosting their forecast. The strangest thing is that it wasn't long ago (1/27/10) that they reaffirmed guidance that was below the street expectation which tanked the stock by 14% on the following day. Then on 2/26/10, our team point to the obvious fact that QCOM and MON should be on your radar after appearing on our daily watch list. Five days after (3/1/10), the company announced a dividend increase of 12% plus a $3 billion stock repurchase program. The stock was at $36.
We reiterated QCOM in the Research Request section of the site. Although the stock is still within 20% of the 52-week low, we'd rather not chase it at this point.

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