Within the high-tech sector, options abound. The most successful companies are those with a highly diversified product offering than can adapt to constantly changing market situations, and usually have a bid in the mobile technologies sector. In this article we will look into three of these cases:
A Stock in Constant Innovation
Google is one of the most common examples used when people talk about a successful company. One can understand why its stock is so pricy, trading at $829.61 (May 2). However, valuation-wise, it exchanges at discount to its peers, at 23.7 times its earnings, versus the 48.1 times industry mean, and very close to its 10-year low of 16.29 (the maximum was 161.5). Most analysts recommend buying this stock at the moment; below you will find the main reasons to back this advocacy:
For starters, Google Inc (NASDAQ:GOOG) dominates whatever field in enters. Its focus on innovation allows the company to create unique products that benefit both the user, usually for free, and the advertiser, through massive transit. Its financial success is key to this process, for its substantial cash balance, which surpasses $50 billion, allows Google Inc (NASDAQ:GOOG) to experiment with different and simultaneous paths to growth.
In the second place, few other companies hold such an impressive execution track record like this firm. Over the past five years, revenue has grown at a compound annual growth rate of 18.1%, gross-profit growth rate of 16.7% and operating-profit growth rate of 6.3% (Zacks Research). In addition, over the years, the management has accomplished a series of very successful acquisitions like Picassa, Android, YouTube, Motorola Mobility, Ad Mob an another 120.
Google Inc (NASDAQ:GOOG) is a dominant search engine in all of North and Latin America, Eastern Europe and most of Asia/Pacific countries. Constantly enlarging its market share, Google seems to offer compelling growth prospects as the market enlarges.
The list of Google Inc (NASDAQ:GOOG)’s attributes also includes a leading position in the mobile market, a growth segment at the moment, the launch of its digital wallet, its strong financial position (especially the absence of long-term debt), profitability and growth.
QUALCOMM, Inc. (NASDAQ:QCOM) is another of those consensus-generating companies. Most analysts, from Goldman Sachs to Barrons and Morningstar, rate this company’s stock as a strong buy, especially as its current valuation at 17.8 times earnings is close to a 10-year minimum and forward P/E looks even more alluring at 12.99.
Besides its outstanding ratios, including among the highest operating and net margins in the industry, at 30.4% and 28.9% respectively (and these values were about 15% higher last December), and absence of long term debt, this company offers some other interesting features that portray a promising outlook for investors: Its forward annual dividend rate is 2.3%.
The strong and continued wireless chip demand should drive earnings in the near-term. The company will benefit from the growing demand of 3G technologies and smartphones in emerging markets, particularly in China.
Last quarter’s results came in just a few days ago. QUALCOMM, Inc. (NASDAQ:QCOM) reported a 24% rise in revenue year over year, to $6.1 billion, and an increase in its dividend by 40%.