As the best January in almost 25 years has come to a close, investors continue to look for value within a market quickly becoming overbought. Below are 3 long ideas for investors to consider that have good growth and dividend prospects.
1. Qualcomm (QCOM) - Everyone knows about Qualcomm's blowout quarter last week as global 3G adoption continues at a strong pace. Qualcomm's patent portfolio is but one business line with their fabless chipset business providing a strong second line. The Snapdragon processors are highly regarded within the industry and Apple (AAPL) has seen fit to divert a significant portion of business Qualcomm's way by pushing out Intel (INTC) and receiving chipsets valued at $10 per iPhone 4S.
Qualcomm's stock is currently trading at a P/E ratio of 23 (high relative to the market but on par with their growth) and an attractive dividend yield of 1.5%. The dividend is an added bonus for tech investors and unusual for a technology company with strong growth prospects.
2. Boingo Wireless (WIFI) - Boingo Wireless is the largest Wi-Fi software and service provider operating a network of over 400,000 hotspots worldwide. Boingo became public in May of 2011 and underperformed like most tech IPOs last year. The fall has created value for investors and the 3rd quarter earnings report is showing strong growth.
In the third quarter of 2011 revenues rose by 22% with a 57% jump in adjusted EDITDA. Growth prospects look strong with network access agreements signed in South Korea and Japan along with an agreement to manage Towerstream's (TWER) wi-fi network in Manhattan.
At a P/E ratio of 16.5 and down almost 25% from its high, Boingo offers some value for investors picking through last year's IPO disappointments.
3. Reynolds American (RAI) - Reynolds American is one of those stocks people love to have in their portfolios but hate to admit it. The maker of Camel cigarettes and Kodiak snuff has been expanding their portfolio and moving into the new fast growing categories of snus, dissolvables, and nicotine replacement therapy to counter long decline in the cigarette industry.
Revenue and earnings growth is slow at less than 5% for 2011 but that is to be expected as cigarette sales decline and the company works to switch users to the new categories without the use of heavy advertising.
The stock trades at a discount for good reason. Litigation risk is a huge overhang for the stock but Reynolds has a $2.5 billion dollar stock buyback program in place and recently raised the dividend in 2011 by more than 5% while maintaining a payout ratio of 80% of net income.