Identifying companies that can withstand market volatility is essential to prospering as the novel coronavirus roils the markets. The 5G network should remain essential to global communication regardless of the course of the virus. And Qualcomm (NASDAQ:QCOM) stock is among one of the best large-cap 5G investments available.
There’s no point in letting the coronavirus keep you away from a perfectly good stock. The 5G rollout should certainly persist after the coronavirus scare subsides. This means that Qualcomm stock is poised to provide consistent returns, even while the market works its way through this challenging, uncertain time.
The Importance of 5G Technology
It’s difficult to believe in Qualcomm’s future if you can’t envision just how crucial the 5G network will be in the coming months and years. Qualcomm has a publicly available presentation, which breaks it down quite nicely. It’s worth reading, even if you’re not planning to own Qualcomm shares.
More than previous digital-communication networks, 5G offers the following:
- Low latency
- Ultra-reliability
- Enhanced mobility
- Faster access to cloud, even while in a moving vehicle
- Greater extreme capacity and throughput
- Support for very large data blocks
- A unified, future-proof platform
If 4G was cutting-edge in the previous decade, 5G is the network of choice for this decade. From vehicles, to factories, to your smartphone, the 5G vision will involve virtually everyone and everything being instantly and intelligently connected. The coronavirus might slow the progress of this, but innovation cannot be impeded on a permanent basis.
Today, Qualcomm’s Snapdragon X55 modem is a powerful contender in 5G connectivity. Designed to be a comprehensive 5G solution, the Snapdragon “[s]upports virtually any available spectrum band, mode or combination.” The X55 can connect a broad array of mobile devices ranging from “smartphones or mobile hotspots, to fixed wireless devices, such as routers and CPEs, to Always Connected PCs, XR devices, cars, and more.”
Reasons to Remain Optimistic
After the company reported its fiscal first-quarter earnings in early February, analysts felt mostly positive about Qualcomm’s future prospects. At that time, 57% of Wall Street analysts assigned the company a buy/overweight rating and 43% gave it a hold rating.
They had an excellent reason to be so bullish on Qualcomm stock. The company’s adjusted earnings for the fiscal first quarter of 99 cents per share easily beat the Wall Street consensus estimate of 85 cents per share. Moreover, the reported $5.06 billion in revenues outdid the analysts’ consensus prediction of $4.84 billion.
Thus, Qualcomm chief executive officer Steve Mollenkopf had every right to tout the company’s inroads into the 5G space. “Our strong fiscal first quarter financial performance reflects a significant inflection point for Qualcomm as we begin to realize the benefits from the ramp of 5G,” stated the CEO.
Lately, though, it’s more difficult to be optimistic as the coronavirus has introduced volatility to the markets. But as they say, no guts, no glory. Owning Qualcomm stock at lower prices means that you have to see the company’s 5G vision for yourself.
If you’re having trouble seeing it, then perhaps a couple of enticing numbers might convince you to consider investing in Qualcomm. A trailing 12-month price-to-earnings ratio of just 19 suggests that the stock presents a strong value. Then there’s the generous forward annual dividend yield of 3.6%. That’s yet another incentive to buy and hold shares of this 5G powerhouse.
The Final Word on Qualcomm Stock
By now, you should be convinced that 5G technology is here to stay. This is true regardless of the financial impact of the coronavirus. Qualcomm stock was a buy before the coronavirus became front-page news, and now that the price has been reduced, it’s practically irresistible.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.