InterDigital, Inc.
IDCC
recently inked a patent license agreement with
Zebra Technologies Corporation
ZBRA
for an undisclosed amount. The multi-year non-exclusive royalty-bearing license deal speaks volumes about the healthy momentum of InterDigital’s licensing portfolio, which includes some of the biggest industry stalwarts. For the record, the current deal is the 16th agreement signed by the company in the last 18 months.
Headquartered in Lincolnshire, IL, Zebra is the leading provider of enterprise asset intelligence solutions in the automatic identification and data capture solutions industry throughout the world. The company has a diversified portfolio of products and solutions that includes cloud-based subscriptions and a full range of services like maintenance, repair, technical support and managed and professional services. The products and solutions sold across 180 countries are designed to help Zebra’s customers achieve enhanced operational efficiency, increased asset utilization, optimized workflows and improved regulatory compliance.
InterDigital’s commitment to licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. It has leading companies, such as Huawei, Samsung, LG and Apple, under its licensing agreements. Consequently, the company expects to generate solid recurring revenues from the patent licensing business in the forthcoming quarters as well.
InterDigital’s global footprint, diversified product portfolio and its ability to penetrate different markets are impressive. Apart from the company’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive significant value, considering the massive size of the market it licenses. Furthermore, the company remains committed to pursuing acquisitions to drive its product portfolio and boost organic growth.
The company is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. InterDigital aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas by leveraging its research and development capabilities, technological know-how and rich industry experience. At the same time, it intends to enhance its licensing revenue base by adding licensees and expanding into adjacent technology areas that align with its intellectual property position.
Additionally, more and more companies are increasingly offering the work-from-home option to employees to ensure their safety and wellbeing. Several firms are also providing a secure and connected workplace setup through quick onboarding and enablement services to support the seamless continuity of businesses and enable employees to fulfill their professional obligations. This, in turn, is likely to create new revenue-generating opportunities for InterDigital, as humans become solely dependent on the digital platform to stay connected not only for their professional lives but also for online education, shopping, dining and entertainment.
The stock has lost 11.7% over the past year compared with the
industry
’s decline of 16.3%. Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) firm.
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A better-ranked stock in the industry is
Sierra Wireless, Inc.
SWIR
, carrying a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Sierra Wireless has a long-term earnings growth expectation of 15% and delivered an earnings surprise of 223.7%, on average, in the trailing four quarters. Over the past year, the stock has gained 27.5%. Earnings estimates for the current year have moved up 616.7% since July 2021. Sierra Wireless continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.
Qualcomm Incorporated
QCOM
, carrying a Zacks Rank #2, is another key pick for investors. It has a long-term earnings growth expectation of 16.1% and delivered an earnings surprise of 12.2%, on average, in the trailing four quarters.
Earnings estimates for the current year for the stock have moved up 41.1% over the past year. Qualcomm is likely to benefit in the long run from solid 5G traction and a surge in demand for essential products that are the building blocks of digital transformation in the cloud economy.
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