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Applied Materials Sell For a 3.8% Win

Posted by on December 19, 2016 6:40 AM
Tags: , , , ,
Categories: Stocks

December 19, 2016: Sell Applied Materials for a 3.8% win in 9 trading days. Congratulations if you were able to make money on the trade. The sell comes as Goldman Sachs cuts AMAT to a Neutral rating from Buy, and sets a price target of $35. Try not to let a winning trade turn into a losing trade.

December 5, 2016: Takeover rumors are circulating about Applied Materials. The rumors I’m hearing are that big players are looking to consolidate in the semiconductor space.

The problem I have with this rumor is that Applied Materials has a market value of over $34 billion. A company looking to takeover Applied Materials would have to be a giant company within the semiconductors space. I think Applied Materials might be too big of a company for a takeover to happen. In fact, Applied Materials is the largest Semiconductor and Materials company in the US in terms of market cap. It’s the second largest company in the world, narrowly behind the Netherlands company ASML Holding with a market cap of $45.6 billion.

Even though I’m skeptical of the takeover rumors circulating about Applied Materials, I like the current valuation on the stock that trades with a forward P/E of 12.

December 5, 2016: The Semiconductor Industry Association (SIA) reports October global semiconductor sales of $30.5 billion which is a +3.4% growth month over month, and +5.1% growth year over year. Regionally, year-to-year sales increased in China (14.0%), Japan (7.2%), Asia Pacific/All Other (1.9%), and the Americas (0.1%), but decreased in Europe (-3.0%). Compared with last month, sales were up across all regional markets: the Americas (6.5%), China (3.2%), Japan (3.0%), Europe (2.2%), and Asia Pacific/All Other (2.0%).

SIA CEO says, “The global semiconductor market has rebounded in recent months, with October marking the largest year-to-year sales increase since March 2015… Sales increased compared to last month across all regional markets and nearly every major semiconductor product category. Meanwhile, the latest industry forecast has been revised upward and now calls for flat annual sales in 2016 and small increases in 2017 and 2018. All told, the industry is well-positioned for a strong close to 2016.”

Applied Materials Stock Chart

The Finviz screener settings used to find Applied Materials are: Sector Technology, Forward P/E Low (<15), EPS growth this year over 30%, EPS growth qtr over qtr High (>25%), Sales growth qtr over qtr High (>25%)

Applied Materials makes manufacturing equipment, services, and software to the semiconductor, display, solar photovoltaic (PV), and related industries worldwide. Applied Materials is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Their expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. Applied Materials has more than 10,200 patents and 15,600 employees in 17 countries.

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Lance Jepsen

For ethical purposes, I try not to hold any position in any stock I profile on unless specifically stated in the article. Owner of Seasoned entrepreneur, investor, and writer. I love God, family, country, stock trading, economics, and helping people learn how to trade.
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