Zacks Investment Ideas strengths: QUALCOMM, Motorola and Clearfield
For immediate release
Chicago, IL – December 22, 2021 – Today Zacks Investment Ideas presents: QUALCOMM Incorporated QCOM, Motorola Solutions, Inc. MSI and Clearfield, Inc. CLFD.
A reminder of the tech bubble? 3 ancient Darlings eclipsing previous peaks
The Nasdaq Composite has a habit of outperforming in bull cycles and underperforming in bear markets. Although the index has underperformed the S&P 500 this year, the past has shown that these periods of relative underperformance do not tend to last very long.
Both indices show a low overall magnitude. Only 39.1% of S&P stocks are trading above their 50-day moving average. The lagging Nasdaq is less than half of that – just 17.5% of stocks are above their respective 50-day moving averages.
In the late 1990s, many tech stocks significantly increased their prices and experienced stretched valuations. The magnitude of major indexes was much stronger back then, as most stocks were up.
We know what happened next – stocks crashed when the Nasdaq fell into a multi-year descent. Financial media gurus claimed in the years that followed that even the biggest names would never see those high prices again.
Yet we’ve been there, for 20 years, with some of the tech bubble darlings reaching new historic heights. Many businesses of this era were not structured to deal with an economic downturn and did not survive to tell the tale. But those who are still around have proven time and time again that they have what it takes to be successful through the various phases of the business cycle.
These companies have adapted to changing times. They have been able to withstand market shocks, while constantly increasing their income and rewarding shareholders. At Zacks, our job is to help you identify which stocks are outperforming the market. Our proprietary model detects positive changes in the fundamentals of each company, allowing our underwriters to profit from future share price appreciation.
Buying a stock at the right time and building up a profit cushion makes it much easier to withstand the inevitable corrections. Unlike many tech bubble investors who have come all the way to the bottom, at Zacks we also alert you to profit-taking opportunities and outright sell signals, not only helping you earn money. money, but also to keep it.
The three former tech lovers we’ll discuss below have all topped the highs of two decades ago and are holding up well to recent volatility. Stocks that come out relatively unscathed from volatile times tend to continue to outperform.
Qualcomm is a world leader in next generation wireless technologies. Qualcomms activities include Qualcomm Technologies which manages its engineering, research and development functions; the company’s semiconductor business, QCT; and the licensing arm, QTL. Based in San Diego, California, QCOM designs, manufactures and markets digital wireless telecommunications products, including integrated circuits, wireless voice and data communication software, as well as global positioning system (GPS) products. .
At Zacks # 2 Buy stock, QCOM has reached or exceeded profit estimates in each of the past 28 quarters. The company produced a surprise average profit over the last four quarters of + 11.23%. QCOM recently announced EPS of $ 2.24 in November, a surprise of + 8.74% from consensus.
QCOM continues to benefit from strong 5G traction and increased demand for its essential products and services which form the foundation of digital transformation in the cloud economy. The stock broke from a long base in November and last week posted a new high as most stocks fell.
What the Zacks model reveals
The Zacks Earnings ESP (Expected Surprise Prediction) identifies companies that have recently witnessed positive earnings estimate revision activity. This more recent information can be a better predictor of the future and give investors a head start during earnings season. In fact, by combining a Zacks # 3 or better ranking with a positive earnings ESP, stocks produced a positive surprise 70% of the time.
QCOM’s earnings PSE is + 0.87%. Analysts agree in terms of earnings revisions and have increased their estimates over the past 60 days for the current year (+ 14.04%) as well as next year (+ 17.62%). Zacks’ consensus estimate for current annual EPS now stands at $ 10.48, a growth rate of 22.72% from last year. QCOM is expected to publish its quarterly results on February 2sd, 2022.
Motorola Solutions provides communications and networking equipment, devices, software, and services. Based in Chicago, Illinois, Motorola Solutions has a strong market position in a variety of areas including barcode scanning, wireless infrastructure equipment, and government communications.
MSI operates through two divisions – Government and Enterprise. The Government segment develops radio systems, devices and control centers for governments around the world. The Enterprise segment focuses on mobile computing systems, advanced data capture and wireless networks. Motorola management expects continued strength in video and device security and is well positioned to benefit from organic growth and acquisition initiatives.
MSI has also posted an impressive track record in terms of earnings surprises, beating estimates for the past seven consecutive years. The company delivered an average surprise of + 9.49% over the past four quarters. MSI realized a surprise of 12.89% in November when it announced EPS of $ 2.19 for the quarter ending in September.
MSI has one of the most attractive charts this year, as the stock was up 53.6% with very little volatility. The stock is clearly in a strong bullish trend and continues to hit a series of new highs even as the major indices have paused.
Zacks’ consensus estimate for 2021 EPS is $ 9.04, which is 17.56% growth from 2020. MSI to release results on February 3e.
Clearfield designs, manufactures and distributes fiber optic management, protection and related products for communications networks. CLFD includes the FieldSmart fiber management platform, which includes its latest generation fiber distribution system and fiber scalability center. These product lines support a wide variety of panel configurations, densities and connectors. Based in Minneapolis, Minnesota, Clearfield deploys millions of fiber ports each year.
CLFD sports a Zacks # 2 Buy ranking and has held up extremely well to recent volatility. The stock has climbed nearly 200% this year and shows no signs of slowing down, hitting a new all-time high today.
CLFD has beaten earnings estimates in each of the past six quarters. The company has averaged a + 50.77% surprise over the past year, most recently registering EPS of $ 0.53 in November – a + 29.27% surprise compared to estimates.
The stock saw positive earnings estimate revision activity, with analysts increasing their 2021 EPS estimate by + 8.82% in the past 60 days. Zacks’ consensus estimate for current year EPS stands at $ 1.85, which translates to 25.85% growth from 2020. CLFD is expected to release its results next month on January 27.e.
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Breakout Biotech Stocks with Triple-Digit Profit Potential
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.