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The Money Man Behind Rick Santorum: Who Is Foster S. Friess?Qualcomm (NASDAQ: QCOM) designs,
develops, manufactures and markets digital wireless telecommunications products and services based primarily on its Code Division Multiple Access (CDMA) technology. The firm supplies integrated circuits and system software for voice and data communications, multimedia devices and global positioning products. It also licenses CDMA semiconductor technology and software to more than 100 other equipment and cell phone makers. The Qualcomm Ventures unit invests in wireless communications and Internet startups. Major competitors include Nokia (NYSE: NOK) and Texas Instruments (NYSE: TXN).
The company pleased investors last week, when it guided fiscal Q3 EPS to 54-55 cents (50-52 cents prior, 52 cent consensus) and Q3 revenues to points slightly above $2.7 billion ($2.5-$2.7B prior, $2.61B consensus). Management also guided FY08 EPS to $2.09-$2.13 ($2.04-$2.09 prior, $2.11 consensus). The updated guidance reflected greater than expected demand for Qualcomm's 1xEV-DO and HSPA chipsets, as well as revenues from advanced 3G network upgrades. Jefferies subsequently reiterated its "buy" rating on the shares and boosted its price target to $54.
QCOM shares
popped into a bullish "pennant" consolidation pattern on the news. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with seven "strong buys", fourteen "buys" and three "holds". Analysts see a 17% average annual growth rate, through the next five years. The QCOM Price to Free Cash Flow ratio (29.26), Sales Growth rate (17.51%), EPS Growth rate (22.73%), Operating Margin (32.34%), Net Profit Margin (35.78%), Return on Assets (19.56%), Return on Investment (21.96%), Return on Equity (22.70%) and Net Income per Employee ($270.55k) compare favorably with industry, sector and S&P 500 averages. Institutions own about 77% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $35.17 and $50.18. A stop-loss of $42.90 looks good here. Note that the firm is expected to report Q3 results in late July.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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