No, I didn't add shares. This was an initial position, my first in a series of planned purchases.
Longterm, a PE of 50 (using forward, or backward, earnings) is not sustainable, for any company. If QCOM returns to a 30-40% EPS growth rate, then a PE of 50, using trailing earnings, is sustainable. But that PE isn't sustainable longterm, because earnings growth in that range isn't sustainable longterm, if you define longterm as 20 years. That earnings growth rate could happen for a period of 5 consecutive years, in the initial worldwide adoption of a technology that QCOM has proprietary ownership of. Which we may be on the verge of.
I've learned the hard way, to start buying above where I think a quality company is fairly valued, and hold back some cash for the possibility that the stock gets far below where I think it should be. Mr. Market is a manic-depressive; he can keep a stock at twice, or half, where it should be, for years.
I have the cash and courage to keep buying (stock, and then LEAPs) all the way into the 20s with this stock. If it gets that low, the volatility of the stock will give me the opportunity to sell my higher-cost lots on rallies. That's how I got out of the position I initiated last year, with 95% of my capital intact. I may have to do that again. I hope not; I'm tired of trading, I'd really like to go back to LTB&H, but that isn't the way to make money in this market. |
