Being in the business of innovation is a lucrative model for this company.
Recently, all the rage in the investing universe has been about tech stocks. Admittedly, that area is where shareholders have reaped huge rewards, with average annual returns over the past 10 to 15 years dramatically outpacing historical norms. Just about every trillion-dollar company in the market has embraced technology, and holders of their shares have been happy to ride the wave higher.
In embarking on this journey to build the Voyager Portfolio, I’m not shying away from tech stocks. However, the goal here isn’t to tell you why massive companies like Nvidia (NVDA 2.12%) and Alphabet (GOOG 0.94%) (GOOGL 0.93%) might still be lucrative investments even after their big runs higher. Instead, finding largely overlooked companies that stand to benefit even more from these favorable trends is the ultimate goal.
Image source: Getty Images.
As a result, the fifth stock for consideration in the Voyager Portfolio is InterDigital (IDCC 1.25%). The company is a budding tech giant in its own right, but as you’ll see, it’s not very concerned about making itself into a household name. Instead, the growth stock just wants to keep its fingers in pies that are expanding most quickly in today’s tech-centered innovation economy.
Playing to its intellectual property strengths
Vertical integration is generally seen as an advantage in business. In particular, having the ability to come up with game-changing innovations in-house ensures that a business can keep its technology proprietary. That forces competitors to engage in costly reverse engineering to try to match desirable features.
However, some companies prefer to focus solely on research and development of cutting-edge technology while leaving the implementation of that new tech within consumer-facing products to others. That’s the business model that InterDigital has chosen, and that model has done a good job of producing strong financial results for the company over the long run.
Today’s Change
(-1.25%) $-3.92
Current Price
$309.44
Key Data Points
Market Cap
$8.1B
Day’s Range
$308.00 – $325.44
52wk Range
$169.58 – $412.60
Volume
165K
Avg Vol
296K
Gross Margin
89.19%
Dividend Yield
0.60%
Foundational technologies and InterDigital’s mission
InterDigital’s approach to R&D is to seek out the building blocks that are necessary to solve the most complex problems facing a wide range of industries. It then obtains patents on its most lucrative discoveries, setting the stage to license its technology to customers.
One benefit to InterDigital’s strategy is that its intellectual property ends up getting used in successive iterations of technological advances. As an example, InterDigital has been instrumental in wireless network technology, both for 5G cellular networks and for local area networks and WiFi. When adoption of streaming video led to wireless congestion, InterDigital created compression and enhancement tools to handle large video files more easily. And with the rise of artificial intelligence, InterDigital’s technology now has new uses for AI video coding and the use of AI over wireless networks.
InterDigital also concentrates on setting global standards for certain technologies. Industries that embrace standards gain the benefit of useful collaborations that reduce costs and make it easier for industries to embrace full competition. As a driver of well-known standards like the MPEG video format and the coming 6G wireless standard, InterDigital is building its sphere of influence and gaining a reputation as a global leader in innovation.
The net result of these efforts has been a steady expansion in the size of InterDigital’s evergreen intellectual property portfolio. Between 2017 and 2025, the company went from 19,000 IP assets to 34,000. Huge growth in patents from video and digital television technology helped complement the ongoing expansion of InterDigital’s wireless assets. The portfolio continues to grow, adding roughly six new patents every day.
InterDigital adds value for its clients
Having extensive intellectual property assets is great, but the real proof is in how much customers are willing to license that IP. In the case of InterDigital, the answer is at the core of its long-term performance. The next article in this three-part series for the Voyager Portfolio goes into detail about InterDigital’s financial success and what lies ahead for the R&D company.
