A gain of approximately 14% in 2018 for shares of Qualcomm Incorporated (QCOM) tells a story of unusual trading activity accompanying the move higher. Many who follow Qualcomm know of the battle the company has been having with Apple Inc. (AAPL), but there is another story we think that isn’t being told ... unusual trading activity.
While headlines for Qualcomm have been potentially negative regarding the spat with Apple, the true tell on the near-term trajectory of the stock lies in the trading activity. At many points in 2018, Qualcomm shares have increased in price alongside an increase in volume. This can be indicative of smart money accumulating shares. The bottom line here is that the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than simply looking at a company's financials alone. (See also: Chip Stocks on Verge of Big Breakout: Todd Gordon.)
For Mapsignals, the strongest indicator of positive price momentum is by obtained measuring potential institutional buying. Since June, Qualcomm stock has logged 19 of these rare signals. We like to see bullish activity in the shares alongside solid forward fundamentals, as this indicates that demand for the stock should increase over time, thus increasing its price.
In the chart below, Qualcomm shares broke out to new 52-week highs on big volumes. Shares should continue the upward trajectory:
Mapsignals' goal is to identify tomorrow's top stocks today. We're basically looking for outlier companies with healthy fundamentals accompanied by outsized, unusual institutional trading activity. By studying these data points, we can make an educated guess as to which equities institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest-quality stocks.
When deciding on the strongest candidate for long-term growth, we consider many technical areas important to success. A few of these for Qualcomm are as follows:
Below, you can see all of Qualcomm's unusual activity signals made over the past 52 weeks:
On top of a great technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Qualcomm has solid earnings and dividend growth rates:
- Company debt levels: 0%
- One-year EPS growth rate: +22%
- Five-year dividend growth rate: +18.8%
Qualcomm checks the box on strong technicals and fundamentals while showing bullish institutional momentum in 2018. We believe that the current level for the shares is in position for further upside. All of this points to further long-term bullish action for the stock.
The Bottom Line
Qualcomm stock represents a potential buying opportunity for the long-term investor. Given the solid earnings growth, dividend growth and multiple unusual accumulation signals, this stock could be worth a spot in a dividend growth-oriented portfolio.
To learn more about Mapsignals' institutional signals, please visit our "About Us" page.
Disclosure: The author holds a long position in Qualcomm shares at the time of publication.