This article presents an overview of the 5 Most Undervalued Quality Stocks To Buy According To Hedge Funds. For a detailed overview of such stocks, read our article, 16 Most Undervalued Quality Stocks To Buy According To Hedge Funds.
5. Qualcomm Inc (NASDAQ:QCOM)
Number of Hedge Fund Investors: 67
Barclays recently increased its price target for several stocks, including Qualcomm Inc (NASDAQ:QCOM), it believes will benefit from the “second wave” of AI. Here is what Barclays said in a note about these stocks:
“We think investor focus has already shifted to ’25 where we are rolling out numbers across our coverage and assuming a robust positive inflection for most end markets. Even factoring in a strong growth year in ’25, there isn’t a ton of low-hanging fruit at these levels. With this said, we are picking our spots into next year and prefer names levered to the ‘2nd Wave of AI.'”
As of the end of the third quarter of 2023, 67 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Qualcomm Inc (NASDAQ:QCOM).
Earlier this month, Qualcomm Inc (NASDAQ:QCOM) CEO and president Cristiano Amon sold 8,100 shares of the company worth over $1.2 million.
In its third quarter 2023 investor letter, Bonsai Partners stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM):
“Robustness at the product level exists differently than in other layers of the value chain. Product diversification follows the same principle, but product control isn’t related to vertical integration. Product control exists in multiple forms, such as switching costs or happy customers who don’t want to buy elsewhere. However, one often overlooked dimension of product-level robustness is adaptability. Some businesses offer goods and services that behave like shapeshifters; they naturally adapt to the market’s needs regardless of how the world changes. Adaptability also serves as a hedge against the unknown.
Consider our investment in Taiwan Semiconductor, which enjoys a highly adaptive product portfolio. If we compare TSMC to a fabless chip maker like QUALCOMM Incorporated (NASDAQ:QCOM), investing in Qualcomm is a bet that its products will retain their technological advantage over time. Meanwhile, TSMC sells a service that naturally produces whatever the end customer wants. There is little need for brilliant product-level foresight; TSMC just needs to maintain its process and service level advantages, allowing it to manufacture whatever the market demands. TSMC’s product portfolio is robust compared to most other semiconductor companies because it naturally adapts to technological and market-driven shifts. Instead of product-level risk, TSMC’s core risks are geopolitical.
In the past, I would have been more drawn to a company like Qualcomm given its clear technological lead in baseband modems, but if I’m honest with myself, I don’t know if their technologies will retain their dominance ten years from now. Qualcomm’s products express a relatively high degree of rigidity in a fast-changing industry, and this is something I prefer to avoid.
While robustness isn’t a guarantee of company survival, it acts as a natural buffer that insulates the companies we invest in against the unknown. The better we are at identifying robustness for our portfolio, the longer we also will endure.”
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