Applied Materials, Inc.’s (NASDAQ: AMAT) Operating Environment Favors Growth

Applied Materials, Inc. (NASDAQ: AMAT) recently announced its Q1 fiscal 2018 earnings results, which beat analysts’ expectations for the sixth consecutive time. The company’s revenues came in at $4.2 billion exceeding analysts’ expectations and recording a 28% annualized gain as compared to a similar period last year.

The company’s management indicated that the rising demand for displays will drive revenue growth this year given the growing global demand for smartphones. Other factors that could contribute to the company’s growth include the rise of the artificial intelligence, IoT, intelligent voice assistants and language processing industry segments.

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Our combined analysis of the company indicates that its revenues have registered consistent growth since Q4 2015 with the exception of a slight dip in Q4 2016. The company’s stock price has also risen in tandem with the higher revenues driven by the high demand for key materials within the semiconductor industry.

The company’s quarterly growth rate has been oscillating in a tight range over the past 16 quarters, but registered significant growth in the latest quarter. The company raised its quarterly dividend payout by 100% from $0.10 to $0.20 as management predicted strong performance for the company in future quarters.

AMAT’s excellent performance is directly attributed to its wide diversification given that it operates through three different segments that address unique needs within the semiconductor industry. It is this diversification that has allowed the company’s annual growth rate over the last few years to remain consistent and it is highly likely that annual growth this year might break out of the current range.

The company’s current performance puts it way ahead of its closest competitor Lam Research Corporation (NASDAQ: LRCX) and this trend is likely to continue. The company is currently trading at a P/E ratio of 15.61, which is much lower than the S&P 500 average of 23.65, and indicates that the company might be undervalued.

Based on the technical data and associated charts at the time this article was written, Stock Traders Daily has provided detailed trading plans, with integrated risk controls, to its clients. These plans will change in real time as prices move. To receive an update or to review the detailed trading plans associated with this data please review our Real Time Trading Report for AMAT.

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Technical Summary

Term →Near Mid Long
Bias Strong Neutral Neutral
P1 55.96 48.48 49.78
P2 58.55 55.50 57.43
P3 59.74 61.90 64.79

Long Term Trading Plans for AMAT

March 7, 2018, 12:43 pm ET

The technical Summary and associated Trading Plans for AMAT listed below will help you make important timing decisions for your trades. This data is based on our proprietary analysis for AMAT. In addition we offer Market Timing Models and Stock Filters in the links above which may increase the proficiency of the decisions you make.

AMAT - (Long) Support Plan

Buy over 57.43 target 64.79 stop loss @ 57.17.
The technical summary data tells us to buy AMAT near 57.43 with an upside target of 64.79. This data also tells us to set a stop loss @ 57.17 to protect against excessive loss in case the stock begins to move against the trade. 57.43 is the first level of support below 59.99 , and by rule, any test of support is a buy signal. In this case, support 57.43 is being tested, a buy signal would exist.

AMAT - (Short) Resistance Plan

Short under 64.79 target 57.43 stop loss @ 65.05
The technical summary data is suggesting a short of AMAT as it gets near 64.79 with a downside target of 57.43. We should have a stop loss in place at 65.05 though. 64.79 is the first level of resistance above 59.99, and by rule, any test of resistance is a short signal. In this case, if resistance 64.79 is being tested, a short signal would exist.

AMAT Long Term Analysis

AMAT EPS Analysis

AMAT Revenue chart

AMAT Growth rate - Quarterly

AMAT Growth rate - Yearly

AMAT PE chart