Thursday, July 20, 2017

Quarterly Results: Qualcomm Stock Can Triple By 2020

Qualcomm qcom

Qualcomm QCOM quarterly results came inline with Street expectations. The stock looks down a little premarket. Next! Let's focus on what matters for investors!  We like it!


The Stock Can Triple By 2020

Earnings reported, great. Next! We said it wouldn't be great.

Let's focus on the prize: 2020. The company has said their addressable market will triple by 2020. Triple, simple math, Up 100% per year for three years. 

So with last night's earnings out of the way we can focus on the prize.   

Internet-of-Things, cloud and data center, and a ton of new wireless applications are driving their potential.  Think about how much you hear about wireless and use it in every part of life, in business and personal.

Plus, the 5-G build-out, the next level of wireless technology is about to start rolling out in the next two years.

We talk to a lot of companies. You don't hear companies say, "yeah our market's gonna triple by 2020." But Qualcomm is saying that.

That's another stat telling you we are headed for a tech boom.

Let's Simplify The Qualcomm Story

Because Qualcomm is just so good all other major players are very frustrated how much Qualcomm has a hold on everybody. 

Qualcomm has seen many lawsuits and has survived. Apple is another stop in that train-ride.  We'll get through it.

As for EU approval of the NXP deal, that's in process. No changes. 

When NXP passes EU inspection Qualcomm earnings are going jump. That jump will likely happen in 2018.

Simple Math A Little Nuts: 
Qualcomm Trading At 8 (EIGHT) Times Price To Earnings

If you back out their net cash position of about $9 per share you have a share price trading at about $47.  ($56 - $9 = $47 right?)

If Qualcomm figures something out with Apple and closes the NXP deal we think earnings can be closer to $6.00 for next year. (See the earnings model)

Let's do the math.

Adjust price to $47 by backing out the net cash then divide by earnings of $6 gives you what?  

7.83333333 price to earnings ratio (we're rounding).

There's a lot of "ifs" in that 7.83333333 but we're ok with a few smelly ifs if the ifs mean 7.83333333 price to earnings for a company that has an addressable market tripling by 2020.

Wrap It Up For Me Elazar. Help Me Make Some Money On Qualcomm

Ok, let's. 

We speak to many managements and do work on a lot of companies. 

Sometimes you hear something different. 

While we obviously care about all the bumps in the short term. A long term triple in their end market opportunities keep buzzing in our ears as 'hey that's something.'

For a huge company with a unique positioning in a huge market, that triple can't be ignored.  And at 7.8333333333 price to earnings ratio, not bad.

By: Chaim Siegel, Elazar Advisors, LLC, Happy and profitable trading!

Reading Comprehension Time
Qualcomm Company:
A) Is the parent company to Apple Inc
B) Is best friends with Apple Inc
C) Has no near term risks whatsoever with Apple Inc
D) Will probably figure out some settlement with Apple Inc which can help triple the stock by 2020

Please answer in comments.



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Disclaimer: Stocks reported by Elazar Advisors, LLC are guided by our daily, weekly and monthly methodologies. We have a daily overlay which changes more frequently which is reported to our premium members and could differ from the above report. Portions of this report may have been issued in advance to subscribers or clients. All investments have many risks and can lose principal in the short and long term. This article is for information purposes only. Ratings are based on hypothetical trade directions. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC and their related parties harmless. Any trading strategy can lose money and any investor should understand the risks.

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