QUALCOMM Incorporated
QCOM
is one stock investors may consider adding to their portfolio to combat the highly-volatile market environment and make some gains from its upside potential. The company currently has a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wall Street has been witnessing high volatility since the beginning of 2022 due to the pandemic and supply chain woes, rising inflationary concerns, increasing crude oil prices and interest rate hikes by Fed. Also, the ongoing Russia-Ukraine war and looming energy crisis in Europe have made investors apprehensive about the global economic recovery.
The macroeconomic and geopolitical uncertainties will likely continue weighing on investors’ sentiments, resulting in more volatility in the U.S. equity market.
Keep an Eye on QCOM
Shares of Qualcomm have lost 6.4% in the past year against the Zacks s
ub-industry
’s decline of 15.7%. Moreover, the stock is down 31.7% from its 52-week high level of $193.58 reached on Jan 5, 2022, making it more affordable for investors.
Image Source: Zacks Investment Research
Apart from having solid fundamentals, Qualcomm has the favorable combination of a
Growth Score
of B and a Zacks Rank #2. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a Growth Score of A or B offer solid investment opportunities.
Qualcomm has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an average earnings surprise of 11.4%. The stock has an impressive long-term earnings per share (EPS) growth expectation of 16.7%. The dividend yield stands at 2.2%.
The Zacks Consensus Estimate of $12.54 per share for fiscal 2022 earnings suggests growth of approximately 46.8% from the year-ago period’s levels. For 2023, the consensus mark for earnings is pegged at $13.30, indicating a year-over-year increase of 6.1%. The consensus mark for revenues is pegged at $44.8 billion and $48.8 billion for fiscal 2022 and 2023, indicating growth of 33.3% and 9%, respectively.
In the last reported quarter
, Qualcomm reported solid second-quarter fiscal 2022 results with record revenues, driven by the ramp-up in 5G-enabled chips and a surge in demand for essential products and services that are the building blocks for digital transformation in the cloud economy
For the fiscal third quarter, Qualcomm expects GAAP revenues of $10.5-$11.3 billion. Non-GAAP earnings are projected to be $2.75-$2.95 per share, while GAAP earnings are likely to be $2.35-$2.55 per share. Revenues from QTL are expected to be between $1.4 billion and $1.6 billion. For QCT, the company anticipates revenues between $9.1 billion and $9.6 billion.
Strong Fundamental Drivers
Headquartered in San Diego, CA, Qualcomm offers designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. The products include CDMA-based integrated circuits (ICs) and system software for wireless voice and data communications and global positioning system (GPS) products.
The company is well-positioned to benefit from solid 5G traction with greater visibility and a diversified revenue stream to meet its long-term revenue targets. During the last reported quarter, Qualcomm recorded strong demand in emerging product categories such as XR and wearables along with 4G and 5G mobile broadband devices and rapid adoption of Wi-Fi 6. The company inked an agreement with chipset manufacturer GlobalFoundries to manufacture state-of-the-art 5G multi-gigabit speed RF front-end products owing to their increasing demand.
Qualcomm is witnessing healthy traction in EDGE networking solutions across diverse sectors. The buyout of Arriver will bolster its ability to deliver fully integrated Advanced Driver Assistance System solutions to automakers.
However, high research and development costs are expected to dent margins, while global chip shortage due to supply-chain disruptions is a headwind, at least in the near term.
Other Stocks to Consider
Other better-ranked stocks from the broader technology sector worth consideration are
Synopsys
SNPS
,
Aspen Technology
AZPN
and
Broadcom
AVGO
. All stocks sport a Zacks Rank #1.
The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $37.06 per share, up 4% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 14.5%.
Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 2.2%. Shares of AVGO have lost 0.2% of their value in the past year.
The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.47 per share, rising 7.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.6%.
Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 2.7%. Shares of SNPS have increased 13.4% in the past year.
The Zacks Consensus Estimate for Aspen’s fiscal 2022 earnings is pegged at $5.50 per share, rising 1.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.4%.
Aspen’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 4.1%. Shares of AZPN have grown 31.9% in the past year.
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