GLOBALFOUNDRIES Stock Delivers Strong Cash Yield – Upside Ahead?

GLOBALFOUNDRIES (GFS) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market

What Is Happening With GFS

GFS may be down -17% so far this year but is now trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs, and also belowits 3-year average.

The stock may not reflect it yet, but here is what’s going well for the company. GLOBALFOUNDRIES delivered strong Q3 2025 results, driven by continued robust demand in automotive and communications infrastructure markets, despite a slight overall revenue dip. The company secured new optical networking designs, expanding its silicon photonics revenue, which is on track to double in 2025. Strategic expansions include the Dresden facility, backed by the European Chips Act, and partnerships with Silicon Labs and Navitas for AI datacenters. Q4 guidance remains optimistic, with full-year 2025 revenue and profitability growth anticipated.

GFS Has Good Fundamentals

• Good Cash Yield: Not many stocks offer free cash flow yield of 5.9%, but GLOBALFOUNDRIES stock does
• Strong Margin: Last 12 month operating margin of 11.4%
• Growth: Last 12 revenue growth of 0.3% – low growth, but this selection is all about high yield and margin
• Valuation: GFS stock currently trading at 42% below 2Y high, 11% below 1M high, and at a PS lower than 3Y average.

Below is a quick comparison of GFS fundamentals with S&P medians.

*LTM: Last Twelve Months

But What Is The Risk Involved?

While GFS stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. GFS fell 51% during the recent inflation shock. While that’s not the steepest drop compared to older crises, it’s still a significant hit. Even stocks with solid fundamentals can see sharp pullbacks when volatility spikes. Past sell-offs prove that no matter how good a company looks on paper, market shocks can quickly turn tides. So, keep that risk in mind when sizing up GFS. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read GFS Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

For more details and our view, see Buy or Sell GFS Stock.

Stocks Like GFS

Not ready to act on GFS? Consider these alternatives:

1. Ryan Specialty (RYAN)
2. Vail Resorts (MTN)
3. Oscar Health (OSCR)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Dipped last month & meaningfully below 2Y high
3. Current P/S < last few year average
4. Strong operating margin with no instances of large margin collapse
5. High free cash flow yield

A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
• Win rate (percentage of picks returning positive) of about 74% for 12-month period
• Strategy consistent across market cycles

Smart Investing Begins With Portfolios

Individual picks can be volatile but staying invested is what matters. A diversified portfolio helps you stay the course, capture upside and reduce downside

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.