QUALCOMM INC (NASDAQ:QCOM) - A Strong Candidate for Long-Term Growth at a Reasonable Price

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

Why QCOM Fits the GARP Strategy

QUALCOMM’s fundamentals align well with Lynch’s approach. The company has delivered an impressive 5-year EPS growth rate of 23.5%, comfortably within Lynch’s preferred range of 15-30%. This growth is sustainable rather than excessive, a key factor in avoiding overextended valuations.

The PEG ratio (0.71)—which adjusts the P/E ratio for growth—is well below 1, signaling that the stock is undervalued relative to its earnings growth. Additionally, QUALCOMM maintains a healthy balance sheet, with a debt-to-equity ratio of 0.48 and a current ratio of 2.73, indicating strong liquidity and financial stability.

Profitability metrics are robust, with a return on equity (ROE) of 39.8%, far exceeding Lynch’s minimum threshold of 15%. This efficiency in generating profits from shareholder equity reinforces QUALCOMM’s position as a high-quality business.

Fundamental Strength

A deeper look at QUALCOMM’s financial health reveals strong margins, consistent cash flow, and a reliable dividend track record. The company’s operating margin (27.6%) and profit margin (26.1%) rank among the top in its industry, while its dividend yield of 2.55% is supported by a sustainable payout ratio.

For a full breakdown, review the detailed fundamental analysis of QCOM.

Our Peter Lynch Strategy screener lists more stocks that fit this investment approach and is updated regularly.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own research before making investment decisions.