Price and value aren’t the same thing. A low-priced stock could be wildly overvalued relative to the business’ prospects. And a high-priced stock could still be pennies on the dollar for a great company ahead of a growth kick.
In today’s market, the fast drop in price, combined with fear and uncertainty, are creating a number of values for long term investors today… even in once high-flying sectors like tech.
One such example is Qualcomm (QCOM). The wireless communications chip manufacturer dominates for 5G and mobile processors. But even with the rollout of the 5G network, shares are seeing their valuation hit an all-time low.
Shares are doing for just over 9 times forward earnings, down from 23 times last year.
The stock is down 13 percent in the past year, holding up better than many other big-cap tech names. That’s thanks to a fat 31 percent profit margin, and 36 percent revenue growth. But even in a bear market, great companies get thrown out with poor ones.
Action to take: Shares are worth accumulating here, and up to $120 per share. The recently-raised dividend payout works out to a 2.5 percent dividend yield here, giving the company a nice blend of growth and income.
For traders, a rebound in shares in the coming months looks likely. The March 2023 $130 calls, last going for about $7.75, could deliver mid-to-high double-digit gains in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.