Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, wireless technology developer InterDigital
With that in mind, let's take a closer look at InterDigital's business and see what CAPS investors are saying about the stock right now.
InterDigital facts
| Headquarters (Founded) | King of Prussia, Pa. (1972) |
| Market Cap | $2.5 billion |
| Industry | Communications equipment |
| Trailing-12-Month Revenue | $701.11 million |
| Management | President/CEO William Merritt (since 2005) CFO Scott McQuilkin (since 2007) |
| Return on Equity (Average, Past 3 Years) | 48.4% |
| Cash/Debt | $701.1 million / $189.1 million |
| Competitors |
Alcatel-Lucent
Nokia
Qualcomm |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 96% of the 1,298 members who have rated InterDigital believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars Jeffrey2012 and Calinvestments, both of whom are ranked in the top 10% of our community.
Earlier this month , Jeffrey2012 tapped InterDigital as a tempting takeover candidate:
It's a clear buyout target and yet it keeps getting cheaper. ... They are making a hundred million a year and growing from licensing royalties. Combine that with another large tech who could leverage the technology and that rate will go higher. Also, any company buying them will have to pay a premium to also take their excellent research team.
Over the past three years, in fact, InterDigital has grown its top line at a solid rate of 14% annually. That's faster than industry giant Qualcomm (10.9%), let alone Alcatel-Lucent and Nokia, who've seen their revenues decline at a rate of 1.9% and 7.8%, respectively.
CAPS All-Star Calinvestments elaborates on the bull case:
The company with the most desirable patent portfolio according to many sources is today's recommendation InterDigital (IDCC). With a market capitalization under $3 billion dollars and a patent portfolio that could potentially be worth $20 billion dollars, Interdigital has a TREMENDOUS potential return. I'm talking about over 500%. ...
[A]ll the profit margins are extremely high, which is to be expected from a company that simply collects royalties for its patents. Whether or not IDCC gets bought out, it will continue to receive royalties for an expanding mobile phone technology market.
This is the type of company that you have to be patient with. Because there is so much speculation as to whether or not it will get bought out, the share price will no doubt be volatile. However, the bottom line is that IDCC's patent portfolio is worth A LOT of money. I believe that the huge upside and seemingly small downside to IDCC make it an attractive risk vs. reward investment.
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