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Here's Why You Should Bet on Applied Materials (AMAT) Stock

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Applied Materials, Inc. (AMAT - Free Report) is currently one of the top-performing stocks in the technology sector and an increase in share price and strong fundamentals signal its bullish run. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

The company has performed extremely well this year and has the potential to carry on the momentum in the near term.

Why an Attractive Pick?

Share Price Appreciation: A glimpse of the company’s price trend shows that the stock has had an impressive run on the bourses over the last one year. Applied has returned 60.1%, comparing favorably with the industry’s gain of 57.5%.

Solid Rank & VGM Score: Applied sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment.

Northward Estimate Revisions: Nine estimates for the current year have moved north over the past 30 days against no southward revisions, reflecting analysts’ confidence in the stock. Over the same period, the Zacks Consensus Estimate for the current year has increased 10.0%. Also, for fiscal 2019, the Zacks Consensus Estimate has inched up 33.0% over the same timeframe to $4.37.

Positive Earnings Surprise History: Applied has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 2.8%.

Strong Growth Prospects: The company’s Zacks Consensus Estimate for fiscal 2018 earnings of $4.04 reflects year-over-year growth of 24.2%. Moreover, earnings are expected to register 8.3% growth in fiscal 2019. The stock has long-term expected earnings per share growth rate of 12.7%.

Growth Drivers: Applied continues to witness technological advancements in semiconductor and display areas. 3D NAND, DRAM and patterning have led to significant market share gains.

Also, over the last few years, Applied Materials increased its bottom line faster than its revenues by successfully controlling its costs. This has caused a margin expansion and profitability over time.

Also, Applied significantly improved on its memory market share. It expects robust double-digit growth in semiconductor, display and service businesses in 2018. Also, wafer fab equipment (WFE) spending in 2017 and 2018 combined is expected to be well above the previous forecast of $90 billion.

Going forward, Applied sees significant opportunities from emerging trends on the semiconductor and display fronts such as artificial intelligence, big data, cloud infrastructure, Internet of Things (IoT), virtual reality and smart vehicles.

We believe that Applied Materials is in a great position to grow sustainably and profitably based on its strong pipeline of enabling technologies, supported by expanding opportunities on the semiconductor, service and display fronts.

Other Stocks to Consider

A few other top-ranked stocks in the broader technology sector are NVIDIA Corporation (NVDA - Free Report) and SMART Global Holdings, Inc. (SGH - Free Report) , each sporting a Zacks Rank #1, while STMicroelectronics N.V. (STM - Free Report) carrying a Zacks Rank #2 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings per share growth rate for NVIDIA Corporation, SMART Global and STMicroelectronics is projected to be 10.3%, 15% and 5%, respectively.

Zacks Editor-in-Chief Goes ""All In"" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>

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