The company offered a mixed earnings report the next day, but the stock has since traded above $62 due in part to the general uptrend in large-cap tech and the optimism surrounding the launch of the Apple (NASDAQ:AAPL) iPhone 5 and other higher-end smartphones coming before year’s end.
Qualcomm is a growing industry leader in mobile communications, an area that is experiencing secular growth that’s largely independent of broader economic trends. As such, it is a company whose business can hold up well amid the perpetual shifts in the global economic outlook. At the same time, however, the stock itself is volatile: in recent years, it has dropped anywhere from 15% to 25% during the times when the broader market has sold off.
Given that its shares already are trading at about 13.5 times forward earnings once the company’s $12 billion net cash position is factored in, any larger downturn would provide an excellent opportunity to get this fast-growing company at an even better price. The stock has a history of rewarding investors who are willing to buy on weakness, and there has been no change in the fundamental story to indicate that this won’t continue to be the case.
– Daniel Putnam, InvestorPlace Contributor