InterDigital Stock May Still Have Room to Run

We think InterDigital (IDCC) stock might be a good investment candidate. Why? Because you get strong margin, low-debt capital structure, and strong momentum – with room to run as the stock is meaningfully below its 52-week high.

There Are Several Things In Favor Of IDCC Stock

IDCC is up 73% so far this year, but can still run more given its good fundamentals and the fact that it is 16% below its 52-week high.

Recent multi-year licensing agreements, including a substantial deal with Samsung, new contracts for 5G, Wi-Fi 7, and IoT technologies, have significantly elevated InterDigital’s royalty rates and expanded market coverage to 85% of smartphones and over 50% of PCs. This consistent success in securing high-value intellectual property agreements underpins strong operating efficiency, with profitability expected to remain high in 2025. Robust cash generation from these deals has facilitated substantial debt repayments and allowed for net cash positioning, further strengthening the capital structure. The company’s stock has surged 87% this year, reflecting analyst “Strong Buy” consensus and upward guidance revisions for 2026 royalty revenues.

And Its Fundamentals Look Good

• Long-Term Profitability: About 62.0% operating cash flow margin and 48.6% operating margin last 3-year average.
• Strong Momentum: Currently in the top 10th percentile of stocks in terms of “trend strength” – our proprietary momentum metric.
• Revenue Growth: InterDigital saw revenue growth of 28.8% LTM and 27.1% last 3-year average, but this is not a growth story
• Room To Run: Despite its momentum, IDCC stock is trading 16% below its 52-week high.

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

*LTM: Last Twelve Months

But Be Wary Of The Risks

While IDCC stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. IDCC fell nearly 94% in the Dot-Com crash, the biggest hit by far. During the Global Financial Crisis, it dropped about 54%, and it slid around 51% in both the 2018 correction and the recent inflation shock. Even the Covid sell-off wasn’t kind, with a pullback close to 47%. The stock looks solid in good times, but these numbers remind you just how volatile it can get when markets turn. No matter the strengths, sharp downturns still hit hard. 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 IDCC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want to see more details, read Buy or Sell IDCC Stock.

IDCC Is Just One of Several Such Stocks

You could also check out:

1. Nextpower (NXT)
2. Coeur Mining (CDE)
3. Sterling Infrastructure (STRL)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. High operating or (cash flow from operations) margins
3. No instance of very large revenue decline in the past 5 years
4. Low-debt capital structure
5. Strong momentum

A portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:

• Average 12-month forward returns of nearly 15%
• 12-month win rate (percentage of picks returning positive) of about 60%

The Best Investors Think In Portfolios

Individual stocks can soar or tank but one thing matters: staying invested. The right portfolio can help you stay invested, capture upside and mitigate the downside associated with any individual stock.

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.