Is a Big Move in Store for Applied Materials (AMAT)?

Applied Materials (AMAT) is one of the world’s largest suppliers of semiconductor manufacturing equipment, providing materials engineering solutions to help make nearly every chip in the world. The firm’s systems are used in nearly every major process step with the exception of lithography…

Applied Materials (AMAT) is benefiting from strong momentum in Semiconductor Systems and Applied Global Services. Plus, AMAT is seeing strong demand for silicon in various applications across several markets. In addition, the growing usage of OLED technology in smartphones, TVs, and computers, should help support growth.

As of the end of the most recent quarter, the company had $6.5 billion in cash, which compares favorably to no short-term debt. As for growth, AMAT has shown strong earnings growth with earnings per share growing an average of 30.1% per year over the past five years. Analysts expect earnings to rise 56% year over year in the current quarter.

The stock also looks undervalued with a forward P/E of 17.42. AMAT has shown mixed performance since May, but has been trending up since early October as shown in the chart below. This has led to a Momentum Grade of B in our POWR Ratings system. 

Take a look at the 1-year chart of AMAT below with added notations…

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