There are many different strategies for beating the stock market. And as long as a trader finds one that works for them and follows it consistently, things can work out well. Some traders swear by momentum, which is simply the name for the idea of buying a stock that’s been trending higher.
Those who combine a stock with strong momentum with another factor, like an earnings beat, can likely continue to see the share price rally.
Semiconductor company Analog Devices (ADI), is one such play now. Shares are at a 52-week high. And, they just beat on earnings when they reported on Tuesday, which was further boosted by a strong forecast going into the last quarter of the year.
Overall, Analog Devices has seen earnings grow by nearly 49 percent in the past year, and revenues are up 77 percent, as their niche in the semiconductor space has held up well.
Action to take: Investors may still like shares near these highs, as the stock is fairly valued at 17 times forward earnings. Plus, the stock pays a 1.9 percent dividend yield at current prices, with room for future growth ahead.
For traders, the March $180 calls, last going for about $7.10, offer mid-to-high double-digit returns in the months ahead on a further move higher in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.