Selling Qualcomm to Raise Some Cash on Projected First Quarter Earnings Weakness

04/06/2015 5:22 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Given the Atlanta Fed’s recent forecast for 0% GDP growth for the first quarter and Friday’s disappointing jobs numbers, MoneyShow's Jim Jubak thinks it’s time to act on his worries and raise some cash, so he’s selling shares of this global semiconductor company as of Tuesday, April 7.

On March 27, I expressed my worries about falling earnings in the first quarter—with earnings for the Standard & Poor’s 500 companies forecast by Wall Street analysts to decline by 4.8%—and suggested that it was time to raise some cash to hedge against a market retreat and to use in buying bargains if earnings season, due to start next week, created any.

With the recent forecast for 0% GDP growth for the first quarter from the Atlanta Fed, and Friday’s disappointing jobs numbers, I think the danger of a drop on first quarter earnings and growth worries has increased.

And I think it’s time to act on my worries and raise a little cash in my Jubak’s Picks portfolio. I will be selling shares of Qualcomm (QCOM) out of that portfolio tomorrow. The shares are up 47.11% as of April 6, since I added them to the portfolio on July 15, 2009.

Why sell Qualcomm in particular right now? (Or tomorrow anyway.)

The company’s sales are very leveraged to China and growth in China is falling. Qualcomm announced recently that it had lost a big customer. That is thought to have been Korea’s Samsung. The technology sector has shown relative weakness recently. Qualcomm’s chart shows a troubling pattern of lower highs in 2015. And a bushel of pretty good competitors are all gunning for Qualcomm’s market right now; Intel, Arm Holdings, and MediaTek to name three.

I don’t expect this to be the last sale out of the portfolio in coming days. And I’d certainly think to rebuy Qualcomm once the seasonally weak period for technology shares has passed, especially if the stock pulls back significantly.

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