Qualcomm Inc. (Nasdaq: QCOM) stock is not only trading for a bargain - it's a tech company that offers investors exposure into emerging multimillion-dollar markets.
Estimates set these emerging markets with a value of $121.1 million by the end of 2015, with further room for growth.
Qualcomm stock has fallen 29% since Sept. 29, 2014, but don't let the stock's slump fool you. There is stronger performance ahead.
One headwind for QCOM stock was that Samsung passed over Qualcomm's Snapdragon 810 chip for its flagship Galaxy S6 smartphone. Bloomberg reported in January that the chips overheated during testing. QCOM stock saw a loss of almost 16% from the start of January.
U.S.-based manufacturers of communication and network solutions like Qualcomm also faced increased barriers for profitability in Asian markets this year. Chinese government officials endorse the purchase of local technology for its agencies, and stricter regulations on imported telecommunication products add difficulty for generating revenue growth in foreign markets.
Money Morning Defense & Tech Specialist Michael A. Robinson identified two key reasons why buying Qualcomm stock now will pay off for your portfolio...
How Qualcomm (Nasdaq: QCOM) Will Grow Through a Powerful Acquisition
The first reason is Qualcomm's acquisition of CSR in April 2015. Robinson called CSR a "pioneer in Bluetooth and wireless connectivity systems" and showcased why the QCOM stock price has tremendous fuel for profit growth.
"CSR ranks as a leader in automotive 'infotainment systems,' telematics, and technology for the Internet of Everything (IoE). This last market is a potential goldmine for Qualcomm," said Robinson. "The International Data Corporation expects the IoE market, with its billions of interconnected devices, to grow from a value of $1.9 trillion in 2013 to $7.1 trillion by 2020."
Prime access to the IoE market's projected $7.1 trillion value in the next five years offers a positive outlook for overall net income gains. Before this acquisition, Qualcomm reported net income growth of 23% from 2012-2014. Access to the IoE market will only help expand profitability.
Technology stock investments need new sources of growth to drive profits. It also helps if they own a large amount of patented technology - and that's another reason QCOM is a solid tech stock to own.
Qualcomm's Profitable Patent Collection
Qualcomm reported over 2,196 pages of patents in over 10 countries as of Aug. 6, 2015.
Robinson noted that these patents "form the foundation of the world's mobile communications."
Techcrunch reported that Qualcomm acquired 1,400 patents from Hewlett-Packard Co. (NYSE: HPQ) in 2014. These patents included: Palm, iPaq, Bitfone, and patents that were still pending.
Adding patents, even of older technology, serves as a defense mechanism against any potential copyright or infringement during future innovation.
The tech company also boasts a strong reach into a sector that is still in its infancy: wearable technology. Research firm Visiongain projected the global wearable technology market could reach a value of $16.1 billion by the end 2015.
Finally, after a recent major announcement from QCOM, you'll want to take serious consideration into adding QCOM stock to your buy list now...
Qualcomm Enters Profitable Drone Market
The Consumer Electronics Association estimates that revenue in the U.S. drone market will approach $105 million this year - up 52% from 2014. The CEA projected the worldwide drone market to be worth $1 billion by 2018.
And now Qualcomm is positioned to have a piece of that...
Qualcomm Snapdragon Flight was introduced on Sept. 1. Snapdragon Flight is a board system for drones. As reported by Wired, Snapdragon comes with all the bells and whistles for competitive placement within the industry: dual-band Wi-Fi, Bluetooth connectivity, a Global Navigation Satellite System, and real-time flight control support, just to name a few.
During the introduction, the company also announced that drone developer Yuneec planned to release a drone using the chip in 2016 (exact date not yet released).
Qualcomm Stock: By the Numbers
Qualcomm has an $85 billion market cap. It has 30% operating margins and trades at 11.5 times forward earnings - which is a 42% discount from the Nasdaq 100.
Yahoo Finance! analysts set a one-year target price of $72.20 - a 26.31% increase from the current QCOM stock price.
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