We recently published a list of 12 Best Affordable Stocks To Buy Right Now. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against other best affordable stocks to buy.
Economic and Market Outlook 2025
There has been a growing debate regarding whether the economy of the United States will have a soft landing. A recent report by Vanguard titled “Beyond Landing” released on November 25 discusses the economic outlook for the year ahead. The report highlighted that global inflation has significantly decreased over the past two years, nearing the target of 2%. However, this decline has been inconsistent across different regions, with many developed markets experiencing slowdowns due to monetary policy adjustments. The United States stands out as an exception, showcasing robust economic growth and full employment despite restrictive monetary policies.
READ ALSO: 10 Best Small-Cap Stocks Ready To Explode and 10 Cheap NASDAQ Stocks To Invest In Now.
The report raised critical questions about whether the US has achieved a “soft landing” or if high interest rates will eventually lead to a “hard landing.” The narrative has largely focused on the Federal Reserve’s ability to time rate cuts effectively to facilitate painless disinflation. Vanguard suggests that the strong growth and falling inflation in the US may be better explained by supply-side dynamics, such as increased labor productivity and a surge in available labor, rather than solely by Federal Reserve policies.
Regarding the 2025 outlook, the firm anticipates that US real GDP growth may decline from around 3% to closer to 2%, influenced by potential policy risks like trade tariffs and stricter immigration regulations. Core inflation is expected to remain above 2.5% for most of 2025. The firm also predicts that interest rates will stabilize at levels higher than those seen during the 2010s, fostering better returns in cash and fixed-income markets over the next decade. However, they express caution regarding equity markets due to elevated valuations. The report highlights a tension between momentum and valuation in risk assets, suggesting that while some stocks may continue to perform well, their high valuations could pose risks if economic conditions change unexpectedly.
A technician testing the latest 5G device, demonstrating the company’s commitment to innovation.
Our Methodology
To compile the list of the 12 best affordable stocks to buy right now, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener we shortlisted stocks trading below a Forward P/E of 15, as of December 4, and that are expected to experience earnings growth this year. Next, we sorted our initial list by market capitalization and cross-checked the Forward P/E of each stock from Seeking Alpha and earnings growth from Yahoo Finance. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders as per Insider Monkey’s database for Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
QUALCOMM Incorporated (NASDAQ:QCOM)
Forward P/E Ratio: 14.16
Earnings Growth This Year: 9.52%
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) is a prominent technology company specializing in wireless communication technologies. It designs and manufactures integrated circuits and software for smartphones and smart devices, as well as advanced automotive technologies like automated driving systems. Its competitive edge originates from the numerous patents it holds in wireless technology.
The company’s smartphone chipset, the Snapdragon series is one of the most widely used in the industry. Its Snapdragon X75 modem is not only being used to power the new iPhone 16 models but is also the powerhouse of the generative AI-enabled Galaxy series. During the fiscal fourth quarter of 2024 alone, QUALCOMM Incorporated (NASDAQ:QCOM) generated $33.2 billion in QCT revenue, up 9% year-over-year. Within the QCT segment handset revenue contributed $6.1 billion mainly due to the quick adoption of the Snapdragon 8 Elite chipset.
Looking ahead, Samsung’s upcoming Galaxy S25 is expected to utilize the Snapdragon 8 Elite chipset, indicating continued growth for the company. Moreover, other manufacturers such as ASUS, Honor, OnePlus, and OPPO are also launching devices with this chipset. Management anticipates first-quarter fiscal 2025 revenue between $10.5 billion and $11.3 billion.
Madison Sustainable Equity Fund stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM) in its Q3 2024 investor letter:
“Alphabet Inc., Eli Lilly and Company, QUALCOMM Incorporated (NASDAQ:QCOM), Microsoft Corporation, and Apple Inc. were the largest detractors. Qualcomm has given back some of its first half gains after the CFO commented at a conference that its entrance into the AI PC business would take time to ramp. We continue to see Qualcomm as well positioned with growth from AI moving into the mobile phone, from new opportunities in the Internet of Things (IoT), and within the Auto industry but will also look to future growth as they enter the PC market.”
Overall, QCOM ranks 8th on our list of best affordable stocks to buy right now. While we acknowledge the potential of QCOM to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than QCOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
