Qualcomm (QCOM) provides chips to all of the major smartphone manufacturers, benefiting from the massive global adoption of smartphones regardless of which company emerges victorious from the battle for mobile device dominance, says Christopher C. Grisanti, Owner, Co-Founder and Co-Portfolio Manager at Grisanti Capital Management.
“We basically view Qualcomm as the arms dealer to the whole smartphone industry today. They don’t care who wins in the marketplace — if Apple (AAPL) wins, they sell Apple chips. If Samsung (005930.KS) wins, they sell Samsung; they sell Motorola (MSI). When I own Qualcomm, all I care about is that the pie is growing as quickly as possible, and we think that that’s true,” Grisanti said.
Grisanti says QCOM doesn’t have to worry too much about whether smartphones are affordable in emerging markets, because different clients sell at different price points, making the stock a real play on smartphones. He also says smartphones is a trend that has had its profitability underestimated by some of the investor world.
“Qualcomm reported [recently], and it was up 5%. So even though it is not a particularly cheap stock, it’s one that: A, the market likes, but B, is not that expensive compared to the growth of the pie. It’s one of the few areas of technology these days that continues to grow by leaps and bounds,” Grisanti said.
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