Why You Should Consider Buying QualcommQCOM) faced some major problems in 2015 mainly because Samsung excluded the company’s Snapdragon 810 processors from its flagship phones Galaxy S6/Galaxy S6 Edge. Due to this, the company lost a lot of business to its rivals. Samsung kicked Snapdragon 810 processors out from flagship phones mainly due to overheating and efficiency related issues. But everything changed this year, as Samsung used Qualcomm’s Snapdragon 820 in its latest flagship phones Galaxy S7/Galaxy S7 Edge (in some regions) because the company solved all the issues that were found in Snapdragon 810 processor.
Earlier this year, Samsung introduced its new 14 nanometer FinFET octa-core processors for mid-range processors, but surprisingly it used Qualcomm’s octa-core processors in its latest mid-range phones, the Galaxy C5 and Galaxy C7.
On the other hand, the company generates most of its profit from licensing key technology, and although that business has grieved in recent quarters together with the chip business, it should carry on generating enormous profits moving onward.
Throughout the last twelve months, the company generated $6.5 billion of free cash flow, placing the projected payout ratio grounded on this number at almost 49 percent. Apart from this, LG recently launched its Watch Urbane 2nd Edition, and accounts for the first Android wear smartwatch that comprises built-in LTE cellular communication facility. However, the most significant thing is that LG used Qualcomm’s SOCs with built-in LTE modem.
Qualcomm has proclaimed that it will launch even more progressive SOCs for the next generation of phone watches. However, Qualcomm should think twice about Xiaomi, as it is putting a lot of efforts to make its presence robust in the smartphone industry. Similar to Apple and Samsung, Xiaomi will ultimately learn how to manufacture its own reasonable processor designs from its ARM license. Furthermore, Xiaomi recently bought 1,500 patents from Microsoft, and those clear indicates that Xiaomi is aggressively focused to grasp a robust position in the smartphone market.
I have been recommending investors to buy Qualcomm for quite some time as I believe the stock has bottomed. Since hitting the 52-week lows, Qualcomm has shot up over 20% and I expect it to continue moving higher to $60. Hence, I think investors can still buy the stock.
Disclosure: I don't hold a position in any of the stocks mentioned in the article.
Published on Jun 10, 2016By Akshansh Gandhi