"Qualcomm (NASDAQ: QCOM) is my favorite stock for gains over the next 12 months," says Chuck Carlson. Here's his bullish assessment from The DRIP Investor newsletter.
"Yes, the market is declining. And, yes, it is often scary to buy during such market periods. Nevertheless, there's an adage that 'the best time to invest was yesterday; the next best time is today'.
"Indeed, countless studies have shown that the best thing any investor can do is invest early and often. That is the best way to maximize the power of time, and time will have the greatest bearing on your investment results.
"Thus, investors need to be willing to buy even when it is difficult to do so, or should I so especially when it is difficult to do so. The reason is that we usually are reluctant to buy stocks during market declines. Yet, if you think about it, declining markets should be precisely the time we buy since stocks are cheaper.
"The stock has demonstrated impressive price performance throughout the market volatility in recent months, rising to its highest level in a year above $50 before pulling back.
"The company generates 90% of its revenue from cell-phone chipsets and license royalties paid by users of its intellectual property. The firm has been embroiled in litigation with Nokia over royalties, although some clarity on this front should occur toward the end of this year.
"The company recently raised its earnings guidance for the June quarter to an adjusted income of $0.54 cents to $0.55 cents per share, up from previous guidance of $0.50 cents to $0.52 cents per share.
"Earnings estimates for fiscal 2008 ending in September have risen in the last 90 days and now stand at $2.14 per share. For fiscal 2009, Wall Street is looking for 13% growth in per-share earnings to $2.43. Both estimates could prove conservative, especially with a favorable resolution to the Nokia situation.
"I think these shares could touch $60 over the next 12 months. The stock pays a quarterly dividend of $0.16 per share, giving the stock a yield of 1.3%."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
