Sink or swim stock trading
Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Shares of Qualcomm NASDAQ: Let's examine the bearish and bullish takes on this stock to see if it will sink or swim this year.
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Qualcomm generates most of its revenue through its lower-margin chipmaking business, and most of its profits through its higher-margin patent licensing business. AAPLSamsungHuawei, and Xiaomi. INTCwhich won a portion of the design wins for the iPhone 7. The Qualcomm technology licensing QTL business, which owns a massive portfolio of 3G and 4G patents, collects royalties on every smartphone sold worldwide.
Qualcomm's near-term headwinds look brutal, but the company remains the best in breed producer of mobile systems on chips, which bundle together application processors, GPUs, and baseband modems. Samsung's use of Qualcomm's Snapdragon in U. Qualcomm is also diversifying its QCT business away from mobile devices, with new Snapdragon chipsets for wearables, drones, connected cars, other Internet of Things gadgets, PCs, and even data centers -- which should all reduce the weight of smartphone chips on Qualcomm's top line.
It also recently partnered with Microsoft to develop Snapdragon processors, which were fully compatible with Windows 10, and launched high-end chips for ARM-based servers. Both moves clearly target Intel's PC and data center strongholds.
Qualcomm's planned acquisition of NXP Semiconductors NASDAQ: As for licensing fees, Qualcomm's patent portfolio still gives it plenty of legal clout against defiant companies like Apple. Qualcomm might eventually be forced to reduce its cut -- for example, basing its cut on the price of wireless components instead of the entire device -- but fines and lawsuits won't likely kill the entire business.
Lastly, Qualcomm is a cheap stock with a high dividend -- which is increasingly rare in today's frothy is binary options legal in malaysia. The stock trades at 18 times earnings, which is much lower than its industry average of 28; and it pays a forward dividend yield of 4.
Those figures should limit Qualcomm's downside potential for the foreseeable future. It will be tough for Qualcomm to rally meaningfully this year, because of all the challenges it faces from rival chipmakers, irate regulators, and defiant licensees.
But I also doubt that it will sink, since its expansion into adjacent markets and the NXP deal should greatly improve its 4x atm forex robot prospects. Instead, I believe that it will tread water, since its low valuation and high dividend should attract income investors and set a floor under the stock.
Broker Summary: TD Ameritrade Thinkorswim
Teresa Kersten is an employee of LinkedIn and is a member of The Motley Sink or swim stock trading board of directors. LinkedIn is owned by Microsoft.
Leo Sun owns shares of Qualcomm. The Motley Fool owns shares of and recommends Apple, Nvidia, and Qualcomm. The Motley Fool recommends Intel and NXP Semiconductors. The Motley Fool has a disclosure policy. Leo is a Tech and Consumer Goods Specialist who has covered the crossroads of Wall Street and Silicon Valley since His wheelhouse includes cloud, IoT, analytics, telecom, and gaming related businesses.
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