These 4 Club stocks are making headlines. Here's our take on each news story

Published Wed, Aug 10 20224:53 PM EDTUpdated Wed, Aug 10 20224:57 PM EDT

Kevin Stankiewicz @in/kevinstankiewicz @kevin_stank

Earnings are a bit more subdued this week, but a number of Club stocks are in the news for other reasons. Here's our take on four headlines and whether they impact our investment thesis for each company. Qualcomm The news: Samsung on Wednesday announced two new foldable smartphones — the Galaxy Z Flip 4 and Galaxy Z Fold 4 — and Qualcomm (QCOM) technology plays a key role in both devices. Specifically, Samsung is using the Club holding's Snapdragon 8+ Gen 1 Mobile Platform, which Qualcomm describes as its most advanced 5G processor to date. Among the platform's features are an 18-bit image signal processor, helping phone cameras capture way more data than previous 14-bit ISPs; faster computing and graphics processing speeds; and more energy efficiency, which is helpful when paired with the Galaxy Z Flip 4's larger battery. Club take: Our investment in Qualcomm is due, in large part, to the semiconductor designer's push into markets like automotive and Internet of Things (IoT), diversifying away from its traditional stronghold in smartphones. We believe this multi-year transformation will boost the company's value and help make earnings less reliant on consumer end markets, which as we've seen this year can be a drag on the stock when they go through slowdowns. All of that said, we're glad to see Qualcomm's relationship with Samsung remains strong, even as handsets are set to be a smaller piece of the sales pie in the years ahead. In its previous versions of these foldable phones, Samsung used a less-advanced Qualcomm processor, the Snapdragon 888 5G Mobile Platform. Samsung sees an opportunity for the foldable phone market to grow, and if the South Korea-based company is right, that's good news for Qualcomm. Remember that in late July, when QCOM reported earnings, management told investors about a new deal with Samsung to expand the use of its chips in future premium Samsung Galaxy products. Although the smartphone market is currently going through an inventory adjustment period, and it could take a couple of quarters to sort through, we believe Qualcomm is better positioned to weather this storm because of its share gain story with Samsung and also for the higher average selling prices Qualcomm gets in premium phones. Meta Platforms The news: Meta Platforms (META) said Tuesday it successfully raised $10 billion in its first-ever corporate bond deal. The proceeds are expected to be used for general corporate purchases, which could mean a lot of things, but we think it will be used on share buybacks and also help fund the company's expensive multi-year investment in its metaverse. Club take: Taking on debt to partially fund buybacks can be a risky practice for the wrong company, but we see no issue with Meta taking on some debt for the very first time in the company's history. Even after this deal, the company's balance sheet remains quite strong, and the bond terms look favorable with rates varying from 3.5% on the notes due in 2027 to 4.65% on the notes due in 2062. Meta Platform's business may be slowing due to competition from TikTok, monetization transitions, and a weakening ad market, but the deal should not be viewed as a sign of weakness because tapping the bond market is something that even Apple partakes in from time to time. Last year was a big year of buybacks for Meta, with the company repurchasing about $45 billion worth of stock, or about $20 billion more than what they had spent in the previous three years combined. Meta's buyback in 2022 has been about $15 billion, so the pace of buybacks has slowed down this year, but management still has plenty of firepower at its disposal with the $24 billion it has remaining on the current authorization. Alphabet The news: Bloomberg News reported Tuesday afternoon that the Department of Justice was readying a lawsuit against Alphabet (GOOGL) that would claim its Google unit has an illegally dominant position in the digital advertising market. The report said the lawsuit could arrive "as soon as next month," putting an end to years of investigatory work into the tech giant's digital ad presence. In a statement to Bloomberg, a Google spokesperson defended itself and claimed "enormous competition in online advertising has made online ads more relevant, reduced ad tech fees, and expanded options for publishers and advertisers." Club take: This would be the second time in recent years that the Department of Justice has sued Google. While the first came during the Trump administration and focused on its search engine dominance , we're not surprised to hear President Joe Biden's DOJ could be getting in on the antitrust action, too. The Democratic administration has sought to take a tougher stance against Big Tech. Lawsuits of this magnitude are generally complex, and we recognize a range of outcomes from a settlement to a protracted court battle could be on the horizon. However, when we think about the most drastic enforcement actions the DOJ could take — forcing the company to break itself up — we are generally not that concerned. In fact, we think the sum of Alphabet's parts — YouTube, Google Search, Google Cloud — are worth more on their own than they are together. "Ultimately, Google, if they break it up, then you own the stock. If they don't break it up, then you own the stock. It's a pretty good situation," Jim Cramer said in October 2020 on the day the Trump DOJ announced it was suing Google. We still feel the same way today. Honeywell The news: The president and CEO of Honeywell's (HON) aerospace division painted a rosy picture Tuesday at a conference hosted by the investment bank Jefferies. "As good as setup as I have seen," the executive, Michael Madsen, said. "The challenge is not going to be demand over the next few years. It's not even the challenge this year. It's going to be supply." On the supply side, Madsen said the issue really stems from labor availability. However, he said Honeywell is &quo