Here's Why InterDigital (IDCC) is a Solid Investment Bet Now
Shares of InterDigital, Inc. IDCC have increased 16.7% over the past two years, driven by an accretive customer base and healthy revenue growth on the back of solid licensing momentum. Earnings estimates for the current fiscal have increased 88.5% over the past year while that for the next fiscal have moved up 16.8% over the past 60 days, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment.
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Growth Drivers
Headquartered in Wilmington, DE, InterDigital is a pioneer in advanced mobile technologies, which enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G, and IEEE 802-related products and networks.
A well-established global footprint, diversified product portfolio, and ability to penetrate different markets are key growth drivers for the company. Apart from a strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface, and video to its offerings is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
InterDigital’s commitment to licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. It has leading companies, such as Huawei, Samsung, LG, and Apple, under its licensing agreements. The company is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. InterDigital aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas by leveraging its research and development (R&D) capabilities, technological knowhow and rich industry experience. At the same time, it intends to enhance its licensing revenue base by adding licensees and expanding into adjacent technology areas that align with its intellectual property position.
In addition, more and more companies are increasingly offering the work-from-home option to employees to ensure their safety and wellbeing amid the lingering coronavirus scare. Several firms are also providing a secure and connected workplace setup through quick onboarding and enablement services to support the seamless continuity of businesses and enable employees to fulfill their professional obligations. This, in turn, is likely to create new revenue-generating opportunities for InterDigital, as humans become solely dependent on the digital platform to stay connected not only for their professional lives but also for online education, shopping, dining, and entertainment.
The stock has a long-term earnings growth expectation of 15%. It delivered an earnings surprise of 141.1%, on average, in the trailing four quarters. With a modest dividend of 2.2%, InterDigital currently appears to be an enticing investment option at the moment.
Other Key Picks
Clearfield, Inc. CLFD, sporting a Zacks Rank #1, is another solid pick for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Clearfield delivered an earnings surprise of 37.5%, on average, in the trailing four quarters. Earnings estimates for the current year for the stock have moved up 114.7% since May 2021. Over the past year, Clearfield has gained a solid 59.4%.
TESSCO Technologies Incorporated TESS, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 40.7% since May 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Sierra Wireless, Inc. SWIR carries a Zacks Rank #2. It has a long-term earnings growth expectation of 15% and delivered an earnings surprise of 223.7%, on average, in the trailing four quarters.
Over the past year, Sierra Wireless has gained 44.6%. Earnings estimates for the current year for the stock have moved up 616.7% since May 2021. The company continues to launch innovative products for business-critical operations that require high security and optimum 5G performance.
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