QUALCOMM, Inc. (QCOM): Should You Chip in on this Semiconductor?

Should you buy it?

The financial strength of the company stems from its experience and innovative capabilities. The company has a huge cash chest of $4.9 billion, reflecting its ability to invest into R&D. A quick ratio of 2.9, another important indicator, suggests that Qualcomm should have no problems with its liquidity in the near future. In the past the company has shown a commendable earnings growth rate of 27.6% since 2009.

The booming mobile industry is yet in the infancy stage of its growth, and communications is a field that will drive the world in the years to come. Although the P/E ratio close to 18 is significantly lower than the estimates, Qualcomm’s past numbers and growth plans remain very strong. Its stock has been a little volatile of late and is trading at prices lower than estimates. This represents a good time to buy the stock of a company whose fundamentals are so compelling.

The stock price now hovers in the lower $60s’ and the analysts have weighed in on the share at this price. The company is affected by the falling ASPs, but this does not effect the competitive strength and fundamentals of the company. With such good numbers in the past and bright future outlook, the company is a definite buy for mid to long term investors.

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The article Should You Chip in on this Semiconductor? originally appeared on Fool.com and is written by ROUNAK KHEMKA.

ROUNAK is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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