Back to QCOM: We’ve already discusses why I prefer QCOM at the moment (keeping in mind that AVGO is one of my all-time favorite stocks). Here’s a quick rundown by ShelBot:
🤓 Here is a comparison of QCOM and AVGO as of July 19th, 2023:
– Both QCOM and AVGO have seen strong revenue and earnings growth in the first half of 2023, driven by the increasing demand for 5G chips and devices. QCOM reported a 45% year-over-year increase in revenue and a 92% year-over-year increase in earnings in Q2 2023, while AVGO reported a 28% year-over-year increase in revenue and a 34% year-over-year increase in earnings in Q2 2023¹².
– QCOM has a higher exposure to the smartphone market, especially Apple (AAPL), which accounted for 54% of its revenue in fiscal 2020. AVGO also supplies chips to AAPL, but it has a more diversified revenue stream from other segments, such as data center, enterprise storage, industrial, and cloud¹.
– QCOM has a higher growth potential than AVGO, as it is expected to increase its revenue by 41.6% and its earnings by 97.6% in fiscal 2023. AVGO is projected to grow its revenue by 16.8% and its earnings by 29.7% in fiscal 2023³.
– QCOM has a lower valuation than AVGO, as it trades at a forward price-to-earnings ratio of 13.7, compared to AVGO’s 16.9. QCOM also has a lower price-to-sales ratio of 4.5, compared to AVGO’s 6.8³.
– AVGO has a higher dividend yield than QCOM, as it pays out 2.9% of its share price annually, compared to QCOM’s 1.8%. AVGO also has a lower payout ratio of 51%, compared to QCOM’s 66%, indicating more room for dividend growth³.
– AVGO has a higher return on equity than QCOM, as it generated 45.6% of profit from its shareholders’ equity in the past year, compared to QCOM’s 42%. AVGO also has a higher return on assets of 15%, compared to QCOM’s 12%, indicating more efficient use of its resources³.
Based on these points, I would say that QCOM is still a better buy for investors who are looking for higher growth potential and lower valuation, while AVGO is still a better buy for investors who are looking for higher dividend yield and higher profitability.
¹: [AVGO: Broadcom vs. Qualcomm: Which 5G Stock is a Better Buy? – StockNews](https://stocknews.com/news/avgo-qcom-broadcom-vs-qualcomm-which-5g-stock-is-a-better-buy/)
²: [3 Cheap Semiconductor Stocks to Buy Before They Bounce Back | InvestorPlace](https://investorplace.com/2023/07/3-cheap-semiconductor-stocks-to-buy-before-they-bounce-back/)
³: [Compare trend and price AVGO vs QCOM – Tickeron](https://tickeron.com/compare/AVGO-vs-QCOM/)
(1) 3 Cheap Semiconductor Stocks to Buy Before They Bounce Back. https://investorplace.com/2023/07/3-cheap-semiconductor-stocks-to-buy-before-they-bounce-back/.
(2) AVGO: Broadcom vs. Qualcomm: Which 5G Stock is a Better Buy? – StockNews. https://stocknews.com/news/avgo-qcom-broadcom-vs-qualcomm-which-5g-stock-is-a-better-buy/.
(3) Compare trend and price AVGO vs QCOM – Tickeron. https://tickeron.com/compare/AVGO-vs-QCOM/.
(4) AVGO vs. QCOM — ETF comparison tool | PortfoliosLab. https://portfolioslab.com/tools/stock-comparison/QCOM/AVGO.
(5) AVGO vs QCOM Stock: Which is the Better Buy? – FinanceCharts.com. https://www.financecharts.com/compare/AVGO,QCOM.
For the LTP, let’s:
- Sell 5 QCOM 2025 $100 puts for $8 ($4,000)
- Buy 10 QCOM 2025 $110 calls for $29 ($29,000)
- Sell 10 QCOM 2025 $140 calls for $15 ($15,000)
That’s net $10,000 on the $30,000 spread with $20,000 (200%) upside potential and we’re starting out $14,500 in the money – which is certainly nice. This is the proverbial “born on 3rd base” type of trade!