To All:
My thoughts on the price of QCOM (not directed at Mile High):
First, my disclosure:
I am an infrequent poster on the QCOM threads, but I try to read each and every message (it's difficult wading through all of the new posts every day). I have been long 100% QCOM since August, '98, have added to my position on eighteen separate occasions over the past 12 months, and have sold no shares. I'm disclosing this simply to illustrate my belief in the future of QCOM. Contrary to what some posters seem to think, being fortunate enough to be in this position, does not make me or anyone else smarter, or a better person than someone who owns just 5 shares that they bought yesterday.
OK, here's my opinion: All of the predictions of the future price of QCOM are careless, and are getting out of hand. People seem to forget that, all fundamentals aside, the stock market in general is ruled by emotion. We are all extremely lucky that QCOM has been "allowed" a forward PE of well over 100 (based on $1.25 per share for FY 00), because of the optimism of the market over the past year. This phenomenal PE expansion has allowed many tech stock prices to far outpace earnings growth, QCOM included (yes, I know it was undervalued for years).
QCOM may very well be one of the fastest growing companies in the NASDAQ. However, earnings are expected to grow at 40 to 50% per year, not 100% or 300% per year. If the PE were frozen for the next few years, we would see the stock price increase 40 to 50% per year, or by whatever the earnings growth rate happens to be. To make outrageous future predictions for the stock price, that far exceed the earnings growth rate, assumes a further PE expansion to 150 or 200 times earnings. My question is: Will the market allow this?
Having been through a "bear market" in semiconductor stocks and disk drive stocks a couple of years ago, in which the PE's slowly eroded, and I was nearly wiped out, these lofty PE's make me very nervous. But, don't tell me to sell, or short the stock, because I'm in it for the long term.
I just wanted to add my 2 cents.
Regards,
Mark |
