I hope the raptors all had a wonderful weekend. I’m back from a trip out of town to visit old friends.
music selection: “Sitting on the Dock of the Bay” — Otis Redding
Today’s Big Cheap Tech selection is QUALCOMM Incorporated (QCOM). This 113 billion mega cap is a sort of digital utility in that it provides technology infrastructure to the world. It has a P/E under 17; P/S under 5; and a P/B under 3. Like Intel from last week, the numbers understate the strength of the company. You see, QCOM has almost 14% of its market cap in cash and marketable securities. And get this, there is no – as in ZERO – long term debt. This is a fortress of a balance sheet.
It gets better. Gross margin is just a hair under 60%. Naturally, with that kind of margin, the company gushes cash. Last year’s free cash flow was 7.7 billion. Very nearly 70% of this is returned to shareholders as dividends and share repurchases. The company is clearly very shareholder friendly. The dividend is 2.8% and has been steadily growing. You can sleep well at night if you get assigned shares of this company so lets look at put yields.
Today’s price on QCOM150710P00069500 is 1.48. The trade would be open 40 days and return 19.43% annualized. This is a rocking return on big, fat slug of a slow moving mega cap. You get return and safety all in one package. And the best part is this type of yield is regularly available on the Big Cheap Tech names.
Devour your prey raptors!