The Alpha Algorithm Chooses a Semiconductor Stock

This week’s Alpha Algorithm has chosen U.S.-based semiconductor giant, QUALCOMM Incorporated (QCOM).

The company has been in the news lately as it is in the midst of a possible merger with rival NXP Conductors. In addition, there are rumors that South Korea-based smartphone king Samsung (SSNLF) has agreed to become the sole manufacturer of Qualcomm’s new chip, the Snapdragon 830. Both events are major wins for the company.

QUALCOMM Incorporated (QCOM) is a U.S.-based multinational semiconductor and telecommunications equipment company that designs and markets wireless telecommunications products and services. It derives most of its revenue from chip-making and the bulk of its profit from patent licensing businesses. The company’s headquarters are located in San Diego, California, and it also has 224 worldwide locations.

 QUALCOMM versus S&P 500 YTD

Seven Top Investment Strategies Betting on QUALCOMM

1. Insider and Analysts’ Sentiment

One of 100 top stocks out of 5,000 U.S. stocks where corporate insiders (a director or senior officer of a company, or any person or entity that owns more than 10% of the company’s stock) are buying the stock and Wall Street analysts have recently increased earnings estimates.

2. Insider Buying

Qualcomm is among the U.S. public companies that corporate officers, directors and shareholders who own more than 5% of each company’s stock are accumulating.

3. Share Buybacks

The company’s shares outstanding have been reduced by at least 5% in the previous year through share repurchases.

4. Exponential Technologies

The stock is part of a strategy that invests in nine different fields deemed to be high-growth “exponential technologies”: big data and analytics, nanotechnology, medicine, networks, energy and environmental systems, robotics, 3-D printing, bioinformatics and financial services.

5. Fundamental Strength

Qualcomm is a top U.S. stock based on fundamentals measured by book value, cash flow, sales and dividends.

6. Dividend Dog

One of the five highest-yielding stocks among each of the 10 sectors tracked in the S&P 500.

7. Value Tilt

Selected using a multi-factor modeling approach, this is a value stock designed to enhance portfolio risk/return characteristics.

Recommendation

Buy QUALCOMM Incorporated (QCOM) at market today and place your initial stop at $58.00.

A lot of recent volatility in the stock has made the options overpriced.

So I am holding off on recommending options this week.

Portfolio Update

With Amazon.com (AMZN) up 18.09% since the Alpha Algorithm recommended it on June 30, raise your stop to $822.50 to lock in at least a 15% gain in the stock.

You were stopped out of Sysco (SYY) on Oct. 4 and McDonald’s Corporation (MCD) this morning at a loss.

Sincerely,

Nicholas A. Vardy