Here it is halfway through 2007 -- the basketball and hockey seasons are behind us, and the sleepy summer heat is settling in. That means it's time for a midyear stock review. Up this time is wireless-technology developer and Motley Fool Stock Advisor recommendation InterDigital
InterDigital stock has been a flop over the past six months and essentially sits where it did in January, at about $33 per share. Not that the past two quarters have been quiet -- the company continued to report strong cash flow from technology licenses with customers such as Sony
- InterDigital is putting more funds to work in the legal arena. It initiated a lawsuit to force Samsung to honor an arbitration settlement for royalties. Though InterDigital's yearly outlay is well below the $200 million Qualcomm
(NASDAQ:QCOM)intends to spend on legal issues this year, the figure will certainly be going up as lawsuits drag on.
- InterDigital made investors happy with the completion of a $350 million buyback that took nearly 20% of its outstanding shares off the market.
- Costs have bumped up significantly as InterDigital forges into a new area -- developing its own chipsets for the wireless modem market. Outsmarting incumbents such as Texas Instruments
(NYSE:TXN)and creating winning designs against the giants is going to take more than smooth talking and a bright smile, though, so management is pouring money into developing this product line.
To get a peek at what top investors think of InterDigital's prospects going forward, we can tap the Motley Fool CAPS database of investor opinions and ratings on the stock. CAPS players currently give the company the highest honor, a five-star rating, which it has held all year.
Bullish CAPS investors cite the strong momentum in the company's license agreements with major wireless phone manufacturers, particularly Nokia. This trend gives many investors confidence that InterDigital will reap sizeable profits from billions of next-generation "3G" handsets that will come into the worldwide market over the next several years. Tag on the strong fundamentals and impressive margins, and you've got a stock that many in CAPS-land think will come back to beat the market in the long run.
For more Foolish insight:
- Color to the Numbers: Top Mid-Cap Growth Stocks
- InterDigital: Pay Me Now, Pay Me Later
- InterDigital to Samsung: Pay Up
InterDigital is one of more than 100 stocks in the Motley Fool Stock Advisor family of recommendations, which have posted an average return of 73% versus the S&P's 36% to date this year. Check out the service with a free 30-day trial.
Fool contributor Dave Mock puts cash to work on a daily basis. He owns shares of Qualcomm and is the author of The Qualcomm Equation. The Fool's disclosure policy chews steel and spits nails -- and that's just for breakfast.