IF A STOCK RISES 25% IN 4 DAYS, DO YOU HAVE TO CHASE IT?
BROADCOM’S HISTORY OFFERS AN INTERESTING LESSON.
$AVGO
Broadcom closed at $293.69 on November 6. It rose to approximately $368 over the next 4 trading days. Gain: 25%
So what happened in the past when the same thing occurred?
Since 2009, it has risen by more than 20% in 4 days only 6 times.
In 5 of those 6 instances, the stock continued to rise over the following year.
In 3 of them, the annual gain exceeded 90%.
However, following each of those 5 instances, the stock pulled back by more than 10% at least once.
Broadcom’s adjusted earnings per share grew 96% year-over-year in the last quarter. In other words, there’s a real growth strategy behind the rally. But the stock isn’t cheap anymore. It’s trading at about 38 times its adjusted earnings over the past 12 months.
Missing an opportunity is one thing; blindly chasing the next rally is another.
#AVGO
BROADCOM’S HISTORY OFFERS AN INTERESTING LESSON.
$AVGO
Broadcom closed at $293.69 on November 6. It rose to approximately $368 over the next 4 trading days. Gain: 25%
So what happened in the past when the same thing occurred?
Since 2009, it has risen by more than 20% in 4 days only 6 times.
In 5 of those 6 instances, the stock continued to rise over the following year.
In 3 of them, the annual gain exceeded 90%.
However, following each of those 5 instances, the stock pulled back by more than 10% at least once.
Broadcom’s adjusted earnings per share grew 96% year-over-year in the last quarter. In other words, there’s a real growth strategy behind the rally. But the stock isn’t cheap anymore. It’s trading at about 38 times its adjusted earnings over the past 12 months.
Missing an opportunity is one thing; blindly chasing the next rally is another.
#AVGO