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    Stick With These Strong Themes When Stocks Pull Back

    Given the U.S. equity markets’ strong move since last April, many stocks are currently extended. While I still believe U.S. equities represent one of the best global investment opportunities over the intermediate term, I anticipate that a pullback will likely happen soon. As such, I think it’s wise for investors to limit their new purchases to companies participating in strong multi-year secular themes. I’ll delve into four examples that highlight what I see as the best themes.

    Qualcomm (QCOM): 5G Goes Mainstream

    Qualcomm is a California-based company that develops semiconductors for the wireless technology industry. The shift of cellular communications from 4G to 5G is creating a major product cycle for the company, which is a leader in the 5G space. In fact, the company has signed 110 multi-year license agreements relating to 5G technology with all the major handset manufacturers, including, importantly, Apple . This should create an astounding unit ramp. Qualcomm estimates 2020 5G device shipments of 175 million to 2.225 billion units. Amazingly, 2021 is projected to be even stronger, with device shipments of 450 to 550 million units as consumer adoption of 5G expands globally. Wall Street analysts estimate that Qualcomm’s revenues should grow from roughly $19 billion in FY19 to more than $30 billion in FY22. Earnings have the potential to grow even faster, with some EPS estimates topping $8.00 in FY22. The company will also have a new CEO this year as Cristiano Amon will succeed retiring CEO Steve Mollenkopf, effective June 30. We view this as a smooth transition that will not impact the company’s leadership in wireless technology. Qualcomm is expected to report December 2020 quarterly results on February 3 after market close.

    Intuitive Surgical (ISRG): Pent-Up Demand For Surgeries

    Intuitive is the market leader in robotic surgery with 70% share. Its flagship da Vinci surgical platform is one of the first FDA-approved robotic-assisted surgery systems for general laparoscopic surgery. The platform has performed more than 7 million procedures since its inception. Globally, more than 50 million surgeries are performed each year, of which only 2% (~10% in the U.S.) use robotic assistance. The global market for robotic surgery is growing 16‒18% annually, faster than traditional minimally invasive surgery growth of 5%. Recurring revenue accounts for 75% of Intuitive’s total revenue, resulting in good earnings stability. The company is expected to grow revenue and earnings by double digits next year, driven by pent-up demand from the deferral of elective surgeries as COVID-19 eases and consumers are again comfortable with being in hospitals and surgery centers. In addition, one of the company’s major competitors had a delay in its robotic surgery platform. Intuitive reported December 2020 quarterly results of $1.39 billion in revenues and EPS of $3.58

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