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Strategies & Market Trends : Fundamental Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (2616)	12/15/2012 4:10:31 PM
From: Sergio H	1 Recommendation Read Replies (1) \| Respond to of 4720

QCOM using Bruwin's faceplate for Buffett's criteria (and more): Green = Pass Red = Fail Note: Using these metrics, 100% of high tech companies will not pass the Buffett screen because of high R&D expenses and high equipment costs. In applying Buffett's criteria to high techs, I suggest analysing how these costs are rising or falling in relationship to the book value of the stock. INCOME STATEMENT. GROSS PROFIT :- Gross Profit = Cost of Sales/Revenue >40% 68% SG&A EXPENSES :- SG&A < 30% x Gross Profit 12% R&D EXPENSES :- Little or Nil 20% but R&D expensenses have grown at half the rate of book value growth for the last four year period. DEPRECIATION :- Depreciation < 10% x Gross Profit 7% INTEREST EXPENSE :- Interest Expense < 15% x Operating Income (i.e. EBIT) 0 NET EARNINGS :- Net Earnings > 20% x Total Revenue 32% EARNINGS PER SHARE :- 10 Year Trend showing Consistency & Upward Trend I calculated 4 year trend at about 20% growth. _______________________________________________________________ BALANCE SHEET. ASSETS. CASH & SHORT TERM INVESTMENTS :- Ongoing increase from Business Operations NOT from One-Time events INVENTORY :- Corresponding Rise in both Inventory & Net Earnings CURRENT RATIO :- Current Assets/Current Liabilities < 1, due to Strong Earning Power PROPERTY, PLANT & EQUIPMENT :- Low as possible RETURN ON ASSETS (ROA) :- High BUT with Large Total Assets to reduce Vulnerability LIABILITIES. SHORT TERM DEBT :- Avoid bigger borrowers of Short Term money rather than Long term money LONG TERM DEBT DUE :- Little or Nil yes LONG TERM DEBT :- Long Term Debt < 3 x Annual Net Earnings 0 DEBT/SHAREHOLDER’S EQUITY :- Debt/S.H.Equity < 0.8 where S.H.Equity INCLUDES Value of Treasury Stock YES PREFERRED STOCK :- Nil NIL RETAINED EARNINGS :- Annual Increase > 7% qcom has more than doubled retained earnings from 2008 to present going from $10 billion to $21 billion. TREASURY STOCK :- Should appear and be regularly purchased NO RETURN ON SHAREHOLDER’S EQUITY (ROE) :- Net Income/S.H.Equity > 25% 18% _______________________________________________________________ CASH FLOW STATEMENT. INVESTING OPERATIONS :- Based on +/-10 Year Period, Capital Expenditure/Net Earnings < 50% 62% for this year. FINANCING ACTIVITIES :- “Issuance (Retirement) of Stock, Net” to be a regular NEGATIVE Value. This indicates a NET Buying Back of its own Shares compared to a NET Issuance of its Shares. YES --------------------------------------------------------------------------------------------------------------------------------- TECHNICALS I really do not think the historical price chart for QCOM reflects what the next 36 months has in store for Qualcom. I don't think so either, but I do find TA useful for short term purposes. I like picking up a quality stock like QCOM after a drop, specially on a gap fill. ------------------------------------------------------------------------------------------------------------------------------------- QCOM's MOAT Co. offers complete spectrum of products in its industry. This is something that no one else can claim. QCOM has developed an unique business model, horizontal growth as opposed to vertical. They have created partnerships, originated a new licensing revenue plan and have a stronghold in every area of the mobile communications sector. qualcomm.com ----------------------------------------------------------------------------------------------------------------------------------------