Dividend Investing | Technology

Applied Materials is a Value Play? Let’s Start Looking at it

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Applied Materials supplies equipment, services and software to enable the manufacture of semiconductor (integrated circuit) chips for electronics, flat panel displays for computers, smartphones and televisions, and solar products. [4]
In the past few months, Applied Materials (AMAT) has fallen a ton.  I hold AMAT in my portfolio and figure it’s time to see if I should add more or start considering a stage pull-out.  I will be performing my custom stock-value analysis on AMAT shortly and post my findings soon.  In the meantime, I’ve summarized some market commentary.

The Motley Fool has important items to point out, such as whether we’re at a bottom or not:

“…the company’s profits have historically been tied to cyclical swings in the memory chip and data storage markets — so investors shouldn’t rely on that seemingly low multiple as an indication that the stock is near a bottom.” [1]

…and some weakness:

“…semiconductor systems segment accounted for 61% of the company’s sales in its July quarter … a downturn for the memory chip market is likely to have a significant, negative impact on performance…” [1]

“Comments from Micron Technology’s chief financial officer indicating continued declines for NAND memory prices and a bearish note on the outlook for the memory-chip industry from Morgan Stanley analyst Shawn Kim” [1]

A recent SA article (see source links at bottom) has some positive pointers for those looking to add some shares:

  • AMAT 27.7% pullback since May (down 37.4% since it hit high of $62.40 in March).
  • Growth prospects for 2019 and beyond remain excellent.
  • Believe[s]…shares are currently undervalued. [2]

There have been some analyst downgrades, so that’s a consideration:

“We believe investors’ fears will remain as long as the memory market stays weak” [3]


[1] – Why Applied Materials, Inc. Lost 10.2% in September [Oct. 10, 2018, Motley Fool] – https://www.fool.com/investing/2018/10/10/why-applied-materials-inc-lost-109-in-september.aspx?source=djc&utm_campaign=article&utm_medium=feed&utm_source=djc

[2] – Applied Materials: Major Growth Prospects At An Attractive Valuation [Sep. 26, 2018, Seeking Alpha] –  https://seekingalpha.com/article/4208369-applied-materials-major-growth-prospects-attractive-valuation

[3] – https://www.marketwatch.com/story/applied-materials-lam-research-stocks-fall-after-deutsche-bank-downgrade-2018-10-01

[4] – https://en.wikipedia.org/wiki/Applied_Materials