Two stocks reaching 52-week highs today have piqued the interest of investors – T-Mobile TMUS and Qualcomm QCOM. T-Mobile made waves with its continued expansion, announcing the acquisition of U.S. Cellular’s USM wireless operations for $4.4 billion.
Meanwhile, Qualcomm’s foray into AI has been impressive, propelling its stock up by 48% year-to-date, with T-Mobile also seeing a respectable 4% rise. Notably, Qualcomm’s stock has surged by 94% in the last year, while T-Mobile’s shares have climbed by 24%.
Given this backdrop, the question arises – is it the right time to consider buying T-Mobile or Qualcomm’s stock for further gains?
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T-Mobile’s Wireless Expansion
Ranking as the third largest wireless provider in the U.S. after AT&T T and Verizon VZ, T-Mobile’s acquisition of U.S. Cellular’s wireless operations will grant it access to an additional 4.5 million wireless customers, over 600 additional store locations, and specific spectrum assets. This move is significant as T-Mobile already boasts a market cap of $194.53 billion.
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Zacks estimates indicate that T-Mobile’s total sales are forecasted to increase by 1% in fiscal 2024, with a further 3% rise in FY25 to reach $82.51 billion. Additionally, annual earnings are expected to surge by 30% this year to $9.02 per share, compared to $6.93 in 2023. Looking ahead, FY25 EPS is anticipated to climb by 23% to $11.15 per share.
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Qualcomm’s AI Initiatives
Entering the realm of essential tech companies driving artificial intelligence forward, Qualcomm has developed energy-efficient on-device AI, edge cloud AI, and 5G technologies to democratize AI. Furthermore, the Qualcomm AI Hub hosts a growing library of over 100 pre-optimized AI models across various domains such as IoT, mobile, and compute solutions.
With its vision of making AI ubiquitous propelling its growth, Qualcomm’s total sales are predicted to rise by 6% in FY24 and are projected to further increase by 9% in FY25, reaching $41.85 billion. Impressively, annual earnings are set to leap by 17% in FY24, with an additional 10% rise expected next year to reach $10.88 per share.
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Valuation & Dividend Comparison
T-Mobile and Qualcomm’s stocks hit fresh 52-week highs at $168 and $217 per share, respectively. Currently, T-Mobile’s stock is trading at 18.4X forward earnings, while Qualcomm sits at 21.3X, both below the S&P 500’s 22.2X P/E ratios.
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Adding to their allure is the fact that both T-Mobile and Qualcomm offer annual dividend yields slightly above 1.5%, surpassing the S&P 500’s 1.27% yield.
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Bottom Line
Both T-Mobile and Qualcomm’s stocks hold a Zacks Rank #3 (Hold). Long-term investors could continue to reap rewards, although there might be more opportune moments for purchase given the striking ascent of T-Mobile and Qualcomm’s stocks over the past year.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The answers may surprise you.
Since 1950, even in negative midterm years, the market has never witnessed a lower presidential election year. With voters engaged, the market has shown consistent bullishness regardless of the winning party!