Gene Marcial, Business Week’s Inside Wall Street columnist recommended shares of Qualcomm:

1. Qualcomm has “been on fire in spite of the distempered, volatile stock market”.

2. Though he doesnt typically advise chasing stocks that are spiraling up fast, Qualcomm, the largest developer and maker of digital wireless chipsets based on the CDMA (Code Division Multiple Access) technology, presents an “uncommon” opportunity.

3. Upside catalyst is the advent of the next-generation 3G phones that both Apple (AAPL) and Research In Motion (RIMM) are launching; Apple and RIMM will pay Qualcomm royalties on patents for the use of CDMA-based technology in the 3G phones.

4. Qualcomm’s products include CDMA-based integrated circuits and software for wireless voice and data communications, plus global positioning systems (GPS). Part of the company’s income comes from one-time licensing fees and ongoing royalties on many of its more than 5,700 patents and intellectual property.

5. Qualcomm raised its estimates for the fiscal third quarter and for all of fiscal 2008 despite the weak global economic backdrop; demand for its mobile chipsets for the CDMA and WCDMA 3G-based wireless technologies is likely to accelerate beyond 2008 and should bring in new revenue sources; its media and mobile video initiatives are expected to gain momentum; AT&T also announced similar offerings to its customers using Qualcomm technology.

6 Strong balance sheet, supported by more than $11.5 billion of cash and marketable securities, and no outstanding debt.

7. The stock isn’t cheap, as it is trading at a premium when compared to its peers—22.3 times estimated calendar 2008 earnings of $2.18 a share. But Qualcomm bulls are confident that the use of CDMA-based networks will continue to expand worldwide.

8. Growth of Qualcomm’s CDMA-based devices will be driven by increased shipments to various regions around the world, particularly the emerging countries, such as India and China, followed by the U.S., Europe, and North America.

Conclusion According to Marcial:

So far Qualcomm has been a good call for the bulls. And its prospects should remain bright as Qualcomm’s digital wireless technology finds its way into more markets worldwide.

Track Gene Marcial’s picks at:

http://www.trackthepros.com/categories.php?category_id=404