Investors who have owned stocks since 2016 generally have experienced some big gains. In fact, the SPDR S&P 500 SPY total return in the past five years is 114%. But there is no question some big-name stocks performed better than others along the way.
Broadcom’s Big Run: One company that has been a great investment in the past five years is semiconductor giant Broadcom Inc AVGO.
Broadcom's last five years were as controversial as they were successful. The company’s huge growth was defined by major acquisitions and near acquisitions.
Avago Technologies went public in 2009, trading on the Nasdaq exchange under the ticker AVGO. In a blockbuster tech deal, Avago acquired Broadcom Corporation for $37 billion in May 2015. The combined company would maintain the AVGO ticker but would assume the name Broadcom.
In 2017, Broadcom made a massive $130 billion buyout bid for semiconductor company QUALCOMM, Inc. QCOM. After negotiations with the Qualcomm board of directors, U.S. President Donald Trump ultimately blocked the deal via executive order, citing national security concerns.
In the wake of the failed Qualcomm merger, Broadcom acquired software company CA Technologies for $18.9 billion in 2018. Broadcom’s expansion into software was initially met by mostly negative reactions from analysts and investors.
In 2019, Broadcom’s buying spree continued with a $10.7 billion acquisition of the enterprise security business of Symantec, which has since changed its name to NortonLifeLock Inc NLOK.
At the beginning of 2016, Broadcom shares were trading at around $142. Broadcom dropped as low as $114.25 soon after during a broad market sell-off due to concerns about slowing growth in China. Fortunately, that level would mark the stock’s low point of the past five years as Broadcom consistently put up impressive growth numbers.
The stock broke $200 for the first time in early 2017 and $300 in early 2019. Broadcom peaked at $331.58 in early 2020 prior to the COVID-19 pandemic scare.
Broadcom In 2021, Beyond: Broadcom shares dropped as low as $155.67 when the market bottomed in March 2020. However, a rise in remote work during the crisis ended up being a bullish catalyst for Broadcom’s business. The stock was back at new all-time highs by mid-2020 and ultimately peaked at $495.14 before pulling back to around $473.
Broadcom investors who bought five years ago and held on have generated an impressive return on their investment. In fact, $1,000 in Broadcom stock bought in 2016 would be worth about $4,073 today, assuming reinvested dividends.
Looking ahead, analysts are expecting Broadcom shares to take a breather in the next 12 months. The average price target among the 29 analysts covering the stock is $480, suggesting just 1.4% upside from current levels.
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