Archive for May 11th, 2010

IDCC – Stock Research

Tuesday, May 11th, 2010

Below is a stock with good fundamentals:

InterDigital,Inc.(IDCC) looks appealing at the current multiple:
This near $27. stock has $11 per share in cash and short term investments. InterDigital’ s revenue increased (ttm vs prior ttm) 41.2%. Revenue for the 3/10 quarter was $116.m. The sales increase was due to higher recurring patent licensing royalties. Lower selling, general & administrative expenses contributed to higher earnings in the March 10 quarter.
Growth Rate:
YEAR REVENUE E.P.S.
2008 act. 228.5m 0.57
2009 act. 303.8m 1.73
2010 est. 363.0m 3.20
For the trailing 4 quarters, ending 3/10, the return on equity is 93.6%. The debt to capital ratio at 3/10 is 2.4%.
IDCC is positioned nicely in the shift from 2G to 3G tele-communications. They have already established a strong licensing position for LTE (read conference call 4/29/10). In addition, they have over 50% of the emerging cellular machine to machine market under license.
In summary: IDCC’s low debt, high return on capital, good annual earnings growth, low P.E. ratio of 8.6 and considering that 40% of the stocks selling price is in cash and short term investments, we believe it warrants consideration when the technicals are right.
J. Passalacqua

Possible buy around $25.30 price range.

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