If you're an investor looking to either add positions to your Individual Retirement Account (IRA), or perhaps make some adjustments to it based on risk tolerance, timing, or other considerations, here a few stocks that spring to my mind -- each for a distinctly different reason.
Those who follow the tech industry have no doubt heard of the many legal issues chip leader Qualcomm (NASDAQ:QCOM) is facing. While those troubles may dissuade some investors, they have turned the company's stock into a significant opportunity. Intel (NASDAQ:INTC) is another stock that has fallen off many investors' radar, but it too warrants a look now. Last but not least on my list of great stocks for your IRA is social media behemoth Facebook (NASDAQ:FB), which, despite its size and dominant market position, continues to wow investors every quarter.
Order in the court
Though Qualcomm's list of ongoing legal battles has shrunk following last quarter's $940 million payment to BlackBerry and the $927 million check it wrote to a South Korea regulatory agency to settle charges of anti-competitive behavior around its licensing fees, it's not out of the woods. The company still faces charges from the U.S. Federal Trade Commission (FTC) and a lawsuit from smartphone customer Apple.
Given Apple's decision to not pay Qualcomm's licensing fees to its suppliers -- those suppliers, in turn, were unable to pay them to the chipmaker -- Qualcomm's revenue dropped 11% year over year to $5.4 billion last quarter, though sequentially, that was a 7% improvement. Licensing revenue specifically declined 51% to $854 million.
So what makes Qualcomm a great stock for your IRA? It's down 20% this year, and trading at 12.8 times future earnings, it's valued at nearly half its peer group average of 24.6 times today's earnings. The uncertainty surrounding the lawsuits are factored into Qualcomm's stock price, which minimizes its downside risk. Toss in a dividend that currently yields 4.35%, and you can see why I find this an intriguing stock for both value and income investors, with loads of upside.
Big and still getting bigger
At last count, there were about 3.6 billion people globally connected to the internet. Incredibly, as of last quarter, 2 billion of them were using Facebook every month, a 17% MAU increase over a year ago.
Concerns about user saturation go back years, yet Facebook continues to grow. What makes it a great stock for your IRA is that user growth is translating to outstanding revenue and earnings-per-share (EPS) gains. Last quarter's $9.32 billion in revenue was a whopping 45% year-over-year jump, and income from operations soared 61% to $4.4 billion.
Though expenses rose 33%, a five percentage point improvement in operating margins helped boost EPS to $1.32 a share, an astounding 69% improvement. Better still, Facebook's Instagram property now boasts over 800 million MAUs and while it doesn't break out revenue, most agree it's akin to an ATM. And with the 1.2 billion MAUs for both WhatsApp and Messenger as yet unmonetized, Facebook's earning growth is far from over.
Finally seeing the light
It may be surprising to some that one of the best performing tech stocks over the past three months has been Intel. It has climbed 17% since early July. One catalyst pushing it higher was likely the recent Internet of Things (IoT) coup of replacing NVIDIA as the component supplier for Tesla's automotive infotainment systems.
Intel also announced that it was partnering in the first public 5G use cases in Europe, and is developing wireless technology for virtual reality (VR) users. These forays into cutting-edge markets will help drive growth long into the future, as will the continued solid performance from its older lines.
Intel's largest division, PCs, reported a 12% increase in revenue to $8.2 billion last quarter, and data center revenue climbed 9% to $4.4 billion. IoT revenue was up 26% to $720 million, and memory solutions popped 58% to 874 million. Not only is Intel firing on all cylinders today, it's woefully undervalued with a trailing P/E of around 15, pays a dividend now yielding 2.75%, and has a bevy of opportunities the could fuel its growth long into the future.
Tim Brugger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Facebook, Nvidia, and Tesla. The Motley Fool owns shares of Qualcomm and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.