Investidea: Qorvo, because Apple has nothing left

Инвестидея: Qorvo, потому что Apple ничего не остается

Today we have a speculative idea: take stock of semiconductor components manufacturer Qorvo (NASDAQ: QRVO), in order to make money on their rebound.

Growth potential and validity: 15% behind 13 Months; 28,5% behind 26 Months; 10% per annum during 15 years.

Why stocks can go up: they fell hard, and the demand for the company's products is growing.

How do we act: we take shares on 152,09 $.

When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.

No guarantees

Our reflections are based on the analysis of the company's business and the personal experience of our investors, but remember: not a fact, that the investment idea will work like this, as we expect. Everything, what we write, are forecasts and hypotheses, not a call to action. To rely on our reflections or not – it's up to you.

And what is there with the author's forecasts

Research, like this and this, talk about, that the accuracy of target price predictions is low. And that's ok: there are always too many surprises on the stock exchange and accurate forecasts are rarely realized. If the situation were reversed, then funds based on computer algorithms would show results better than people, but alas, they work worse.

So we're not trying to build complex models.. The profitability forecast in the article is the author's expectations. We specify this forecast for the landmark. As with the investment idea in general, readers decide for themselves, it is worth trusting the author and focusing on the forecast or not.

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What the company makes money on

The company makes semiconductors. Подробный обзор ее бизнеса мы делали ранее, so we won't repeat ourselves here.. Главный момент в том, that Apple is the largest customer of Qorvo - 30% proceeds, а главными рынками — США и Китай.

Инвестидея: Qorvo, потому что Apple ничего не остается

Arguments in favor of the company

Fell down. Since July 2021, the company's shares have fallen heavily: with 199 to 151,72 $.So we can pick them up waiting for the rebound.

Clients' environment. Although Apple has not abandoned its plans to become a predominantly services business, пока ее усилия по развитию этого сегмента терпят поражение в тяжбе с Epic Games. Therefore, the segment of devices will remain the main engine of Apple's business for an indefinite time., which means, Qorvo can hope, that her orders from the apple company will remain at a consistently high level for a long time to come.

  US stock market news - NYSE, NASDAQ on 012.04.2017

В то же время в Китае, in Qorvo's second most important market after the US, вкладываются огромные деньги в развитие производства полупроводников — это тоже будет способствовать росту заказов на продукцию Qorvo.

Ну и в принципе успеху компании способствует развитие сектора высоких технологий: интернет вещей и прочее будут благоприятствовать бизнесу Qorvo не в меньшей степени, rather than Skyworks.

Inexpensive. Company P / E — 15,68 и P / S — 3,83. Taking it into account, you can fairly judge, that there is still room for growth. Fortunately, the company's capitalization is not very large - about $16.72 billion, which will facilitate the pumping of its shares.

Can buy. Considering all of the above, and the semiconductor M&A boom, very likely news of the acquisition of the company. Finally, Qorvo — это прибыльный маржинальный бизнес с хорошими перспективами. И при этом стоит вполне адекватно.

Dividends. The company does not pay, but, given the profitability and good prospects, it could well pay dividends in the area 8 $ in year, which would give more 5% per annum. Think, some activist investor can campaign to force Qorvo management to introduce regular payouts.

Инвестидея: Qorvo, потому что Apple ничего не остается

What can get in the way

usual suspects. Главной проблемой для компании в ближайшее время видится рост стоимости сырья и труда. Это практически неизбежная проблема как минимум на ближайшие пару кварталов, и мы можем лишь надеяться, that the company will be able to pass on these rising costs to customers without impacting its reporting.

Chinese "Messenger". I do not think, that the American state is eager to kill its high-tech exports: this would mean undermining its own defense and technological potential. Therefore, if the United States strengthens the technological isolation of China, то Qorvo дадут экспортные лицензии, so that it can continue to sell its products to China.

Но все же на котировках Qorvo в краткосрочной перспективе новости о новых санкциях против китайских производителей высокотехнологичной продукции скажутся очень плохо.

Also, in the long term, the development of the semiconductor industry in China may lead to, that there will be local companies in China, who can replace Qorvo.

Accounting. There is enough money at the disposal of the company to close all urgent debts. But, Considering, that the semiconductor business is quite complex and capital intensive, can be expected, that Qorvo will spend on expanding and modernizing its production. This will increase the debt burden and reduce the likelihood of the company introducing tangible dividends..

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Poisoned apple. Зависимость компании от Apple на длинных дистанциях, more than three years, can be a source of problems, если Apple снова попытается перейти на сервисную модель бизнеса и снизить долю устройств в своем бизнесе: then Qorvo's sales may suffer. Basically, любой пересмотр отношений Qorvo с Apple может привести к негативным последствиям для отчетности.

What's the bottom line?

We take shares now by 152,09 $. Then there are three options:

  1. wait for the price 175 $. Think, we will reach this level in the next 13 Months;
  2. wait for stock to return 195 $. Think, it's better to rely on 26 Months;
  3. hold shares 15 years, to see, how Qorvo will grow into a digital infrastructure colossus.

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