Keep an Eye Out for Qualcomm Stock
Only a handful of tech firms sat out last year’s wave of acquisitions, and QUALCOMM, Inc. (NASDAQ:QCOM) was one of them. But now the company is hopping on the merger bandwagon. In fact, the firm is rumored to be making a purchase that could send Qualcomm stock (QCOM) surging.
What happened after these rumors leaked was astounding.
Investors got wind of the acquisition and, all at once, QCOM stock advanced more than nine percent over two trading sessions. Nine percent in just two trading sessions, and off a leaked report no less. The market was ecstatic to see Qualcomm spending money on expansion.
If these gains continue, Qualcomm stock could be become a “Golden Goose Stock.” I use that term to describe stocks that deliver a sound dividend and extraordinary capital gains. It’s the rarest of combinations, but one that can help Average Joes become millionaires.
These Golden Goose Stocks make oceans of wealth by adding together the steady drip of dividends with an occasional flood of capital gains. They give you the best of both worlds: steady paychecks on one hand and massive returns on the other. Think about it: you can collect a paycheck every quarter, but still see the stock shoot through the roof. Not many investments offer both.
QCOM stock fits the description of a Golden Goose Stock. It offers a juicy three percent yield. Remember that dividends can add up to double-digits super-quick if you reinvest them into Qualcomm stock. That’s a key point. But there’s also the fact that Qualcomm—the company—is at the leading edge of technological change.
Qualcomm develops cutting-edge microchips, meaning that breakthroughs can lead to massive advances in the share price. That’s what makes QCOM stock so appealing to me. It’s got almost everything I look for in a stock.
What Is Driving QCOM Stock?
So let’s get down to brass tacks. Which company did Qualcomm shareholders just pay for?
The answer might surprise you. NXP Semiconductors NV (NASDAQ:NXPI) isn’t a household name, but it employs 45,000 people in more than 35 countries. (Source: “Here’s Why Qualcomm’s Potential Bid for NXP Semiconductors Is a Smart Play,” Fortune, September 29, 2016.)
Almost a quarter of those jobs are filled by engineers because NXP officials understand that the future belongs to whomever can innovate best. NXP doesn’t squander half of its budget on sales and marketing. The company spends it on research, and on bringing together brilliant people who are willing to push the boundaries of technology.
Can you blame Qualcomm for being interested?
My guess is that the rumored NXP acquisition is real. The company has exactly the right portfolio of products to complement Qualcomm’s. Don’t forget that QCOM stock skyrocketed alongside the rise in mobile computing. The company’s last surge came from selling microchips to smartphone makers, but that era is almost over.
Smartphone sales are flat-lining across the board, not to mention that individual microchip prices have plunged. Besides which, there’s a bigger problem. No one thinks microchips can get any faster, so Qualcomm and its peers will have to find other ways of improving their products.
That’s a serious risk to QCOM stock…
Yet hope remains in the form of NXP. The Dutch microchip-maker specializes in chips that Qualcomm does not. For instance, driverless cars wouldn’t be able to monitor their surroundings without the chips made by NXP that power the cars’ sensors. The “Internet of Things” (IoT) is also a big part of NXP’s potential.
An outright purchase of NXP would be costly, but it could bolster Qualcomm stock for the next decade. My guess is that the Golden Goose Stock could grow fatter and lay heavier golden eggs after striking this deal, so let’s hope the aquisition grows from rumor to fact. The next chapter of QCOM stock depends on it.