Qualcomm (QCOM)

Christmas Countdown (2013)

It’s the day that we’ve dreaded for a while during this year’s countdown. It’s the day where cold hands meet … well, relatively warmer flesh. It’s the sort of thing that can make you go “Moo!” And we’ll reminisce along with eight maidens with the fifth selection of our 2013 countdown.

It still ranks as one of the most jarring experiences of a lifetime of investing.

My investment club owned a sizable stake in Qualcomm (QCOM) during the waning days of 1999 and we watched as the stock price rocketed during the Christmas holiday season back during the final weeks of December 1999.

With a cost basis of less than $5, we watched the price soar to a split-adjusted $200 in short order. I’ll make a really long story really really short by simply reminding any and all of us to do all we can to avoid letting the tax impact of a decision get in the way of making a decision that should be made.

Here’s a look at the stock price versus the return forecasts some 13-18 years ago. The key takeaway is that when a stock has a return forecast of -29%, it’s probably prudent to think about making some sort of a selling decision.

Fast Forward to The Present

Leaving the “ghosts” of Christmas Past behind — we turn to present day conditions at the communications juggernaut. Based on sales growth forecast of 16%, net margin expectations of 33.5% and projected average P/E of 17x, the projected annual return (PAR) is 18-19% with a top shelf quality rating.

The following chronicle is the same information (but tracked monthly) over the last five years — illustrating that the return forecast has rarely been higher than current levels, triggering our interest in the stock.

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