Semiconductor Stock to Avoid in January

QCOM steadily worked lower over the course of 2022

Deputy Editor
Dec 30, 2022 at 10:12 AM
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As Wall Street looks to enter the New Year, it's a good idea to track stocks that are best left on the sideline to begin the year. Historically, there are a notable amount of names that tend to underperform the broader market in the month of January, and Schaeffer’s Senior Quantitative Analyst Rocky White has pulled the 25 worst to give a head start on how to keep your trading portfolio clean of any misses to start the year.
Coming in as the third-worst performing S&P 500 Index (SPX) stock to own in January is semiconductor concern Qualcomm, Inc. (NASDAQ:QCOM). Per White, over the last 10 years, QCOM averaged a return of -3.3%, and finished higher just three out of 10 times. A move of similar magnitude from Qualcomm stock's current perch of $107.32 would push the shares below their annual-low close of $103.88.
 Worst of January 2023
Like most tech and semiconductor stocks, QCOM has had a rough year. A mid-July rally was rejected by the 180-day moving average, while the 100-day trendline recently stepped in as a ceiling. Year-to-date, Qualcomm stock is off by 41%.
 QCOM Chart December 302022
An unwinding of optimism from the brokerage bunch could weigh on the shares. Right now, 12 of the 17 analysts covering QCOM rate it a  "buy" or better. Plus, the 12-month consensus target price of $146.43 is a 35.8% premium to QCOM's current perch. Both of these point towards room for downgrades and/or price-target cuts.
Weighing in with options could be a prudent route. Qualcomm stock's Schaeffer's Volatility Index (SVI) 39% tanks higher than just 28% of readings from the past year, meaning options traders are pricing in low volatility expectations. It's also worth pointing out that QCOM ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just 16 out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate

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