Sprint Nextel Corporation (S), Sirius XM Radio Inc (SIRI), QUALCOMM, Inc. (QCOM): Choosing Favorites for a Contrary Buy in May

3. Growing fast is not always a growth story

QUALCOMM, Inc. (NASDAQ:QCOM) is probably the one that is just generally a good investment rather than having a focused plan for the next few years. Mobile is still growing and evolving, which means there is still a lot of potential. QUALCOMM, Inc. (NASDAQ:QCOM) is one of the leading mobile chipmakers. The entry of Intel into the field raises some concerns, but I do not think Intel poses a lethal threat to Qualcomm. The Snapdragon chip is impressive, and I have seen the commercials that play in the movie theaters. The marketing is huge for something that people are not always aware of.

QUALCOMM, Inc. (NASDAQ:QCOM) has all the signs of a strong company. Revenue is increasing at a steady and impressive pace, with solid margins. The stock market seems overly obsessed with growth. Monumental growth is only needed to maintain a stock price if it is trading at a substantial premium. Qualcomm’s PE ratio is not outlandish, and I would not say QUALCOMM, Inc. (NASDAQ:QCOM) is fattened on a growth premium over its competitors. The company can continue to grow at a slower pace if necessary and organically grow the share price. Not every stock needs to have 15% YoY growth. Growth slowing is a part of the standard business cycle.

QUALCOMM, Inc. (NASDAQ:QCOM) is a solid company that is bringing in more and more money with solid net margins of 30%. Your patience will be rewarded with a 2% dividend yield that I expect to grow if the share price lags, because with 30% net margins, the company is almost a money machine. Growth can slow, but the strength it has built will remain. Slower growth does not mean very little growth, and it is worlds away from no growth.

Conclusion

There are never any guarantees, but this list goes from the turning around, Sprint Nextel Corporation (NYSE:S), to the mostly turnaround, Sirius XM Radio Inc (NASDAQ:SIRI), to the strong company, Qualcomm. With a multi-year approach to these stocks, you can use any entry provided by a May lull as a buying opportunity. None of these stocks are ones I have positions in, even though there are others I think have a good long-term outlook, these are the ones that strike me as being the most assured.

The article Choosing Favorites for a Contrary Buy in May originally appeared on Fool.com and is written by Nihar Patel.

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