QUALCOMM INC (NASDAQ:QCOM) – A Strong Candidate for Long-Term Growth Investors

QUALCOMM INC (NASDAQ:QCOM) stands out as a compelling pick for investors seeking growth at a reasonable price (GARP). The company, a leader in wireless technology, meets key criteria from Peter Lynch’s investment strategy, balancing solid growth, profitability, and an attractive valuation.

Why QCOM Fits the GARP Approach

• Strong Earnings Growth: Over the past five years, QCOM has delivered an impressive average annual EPS growth of 23.5%, well within Lynch’s preferred range of 15-30%. This indicates sustainable expansion without excessive risk.
• Reasonable Valuation: With a PEG ratio (past 5 years) of 0.56, the stock appears undervalued relative to its growth. A PEG below 1 suggests the market may not fully price in future earnings potential.
• Healthy Financials: The company maintains a Debt/Equity ratio of 0.48, below Lynch’s upper threshold of 0.6, and a Current Ratio of 2.73, reflecting strong liquidity.
• High Profitability: QCOM’s Return on Equity (ROE) of 39.8% far exceeds the 15% minimum Lynch favored, highlighting efficient use of shareholder capital.

Fundamental Strengths

Our fundamental analysis report rates QCOM 8 out of 10, with standout scores in profitability (9/10) and financial health (8/10). Key takeaways:

• Margins: Operating margins of 27.6% and profit margins of 26.1% rank among the industry’s best.
• Dividend: A 2.4% yield with a sustainable payout ratio (34% of earnings) adds income appeal.
• Growth Outlook: While revenue growth may slow, EPS is projected to grow 10% annually, supported by 5G and IoT demand.

For more stocks matching the Peter Lynch strategy, explore our screener results.

Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.