Qualcomm, Inc. (QCOM) Is Just Where It Wants To Be

Maxim Integrated Products Inc. (NASDAQ:MXIM) pays the highest dividend of Qualcomm’s peers and one of the highest among semiconductor companies. With a dividend yield of 3.3%, Maxim already looks attractive, but that is where the attractiveness ends. Maxim’s dividend is a 55% payout of earnings and the tech stock already trades richer than most of its peers at 14x forward earnings. Jim Simons was the top fund owner last quarter with over 3 million shares, while fellow billionaire Ken Griffin fell in second with ownership of 1.9 million shares (check out Jim Simons’ newest picks).

Nvidia Corporation (NASDAQ:NVDA) is down over 10% year to date as it has more exposure to the PC market, compared to Qualcomm’s exposure to the high-growth mobile market. This semiconductor company is the cheapest among Qualcomm’s peers at an 11x P/CF, and a 13x forward P/E, but we believe this is well deserved. Nvidia’s expected EPS growth rate is only 4% over the next half decade (in annual terms), while the company also has one of the lowest return-on-sales ratios at only 12%.

Broadcom Corporation (NASDAQ:BRCM) is another major semiconductor company that is up 10% year to date. Broadcom has the best expected growth of any of the other stocks listed; it’s expected to grow earnings 20% a year over the next half-decade. This alone makes the stock attractive, but coupled with its industry-low 11x forward earnings multiple and Broadcom becomes a solid ‘growth at a reasonable price’ play. Notable hedge fund manager Ken Griffin upped his stake in Broadcom over 40% last quarter (see Ken Griffin’s latest picks).

Qualcomm, even as a large-cap stock, still offers investors solid growth prospects. With a balance sheet that boasts no debt and $12.3 billion in cash, Qualcomm is a solid buy. The semiconductor company only trades at 13x forward earnings, compared to the current forward P/E of Texas Instruments (17x), which has a less impressive balance sheet and growth prospects.