Qualcomm. Omega increased its stake in QUALCOMM, Inc. (NASDAQ:QCOM) to a total of 3.3 million shares by the end of the quarter. The $110 billion market cap communications equipment company’s net income fell last quarter versus a year earlier, but this was because of earnings from discontinued operations in the year-ago period; earnings from continuing operations actually came in 30% higher. The stock is valued at 18 times its trailing earnings, so we wouldn’t call it a pure value stock, but the recent performance is quite strong and so QUALCOMM, Inc. (NASDAQ:QCOM) may offer “growth at a reasonable price.” That’s certainly what the sell-side thinks, as their earnings estimates imply a forward P/E of 13 and a five-year PEG ratio of 0.8.
As a result QUALCOMM, Inc. (NASDAQ:QCOM) looks interesting to us, and we’d be interested in taking a closer look at the company to see how it might grow enough over the next several years to merit a higher valuation. We’re wary of getting involved in Sprint Nextel Corporation (NYSE:S) at a price higher than the takeover offer- it seems a bit speculative to us, and would certainly require a good deal of confidence that bids will be raised. As for the energy dividend plays, we certainly don’t like those in value terms. Income investors could of course find yields of up to 8% attractive, but even in that case it’s probably wise to examine why the stock is trading at its current multiples and what the chances are of a severe decline in price.
Disclosure: I own no shares of any stocks mentioned in this article.