Is There Now An Opportunity In QUALCOMM Incorporated (NASDAQ:QCOM)?

QUALCOMM Incorporated (NASDAQ:QCOM) saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on QUALCOMM’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for QUALCOMM

Is QUALCOMM Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 19% below my intrinsic value, which means if you buy QUALCOMM today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $142.78, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since QUALCOMM’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of QUALCOMM look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -16% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for QUALCOMM. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? QCOM seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on QCOM for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on QCOM should the price fluctuate below its true value.

If you want to dive deeper into QUALCOMM, you'd also look into what risks it is currently facing. To that end, you should learn about the 2 warning signs we've spotted with QUALCOMM (including 1 which doesn't sit too well with us).

If you are no longer interested in QUALCOMM, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.