Tariff fears have subsided in recent weeks. But that trend isn’t over by a long shot. Investors who expect a quick resolution will likely be disappointed by choppy markets in the weeks and even months ahead.
However, tariff uncertainty creates better buying opportunities, particularly for long-term investors. That’s because low prices combined with cheap valuations and underlying fear could spring higher as fears subside and investors are willing to pay higher multiples, particularly for great companies.
One company facing tariff fears now is Qualcomm (QCOM). The wireless chipmaker’s earnings did little to assuage fears. Tariffs on the company’s technology remain a concern, and it’s likely that will weigh on earnings for the foreseeable future.
However, shares are cheap, trading at 16 times earnings. And Qualcomm’s intellectual property in the wireless chip space is second to none, allowing it to sport a 26% profit margin. The recent fears also don’t change the fact that earnings rose by 15% in the past year.
Action to take: Qualcomm will come out all right in time. This is one tech company that investors could accumulate now as a tariff fear trade that will move higher once that fear ends. At current prices, Qualcomm also pays a 2.4% dividend.
For traders, the September $160 calls, last trading for about $7.25, could see mid-to-high double-digit returns on a move higher over the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.