Stocks and sectors tend to ebb and flow. The unusual economy of the past few years has caused some sectors to get overly bullish, and now with the market pullback over the past year, overly pessimistic.
That’s creating some reasonable values for long-term investors, particularly those who are patient waiting for growth trends to play out. That’s especially true with many tech stocks, which got hit hard in last year’s market selloff.
In the tech space, chip manufacturers have a bright few years ahead. However, the outlook now is still murky amid a slowing economy. That hasn’t stopped some companies, like
Applied Materials (AMAT) from reporting strong earnings.
The company recently beat on both earnings and revenue, and the forecast is starting to look better than expected after taking a hit last year. Meanwhile, shares trade at about 16 times forward earnings, a discount to the overall stock market and the company’s growth potential.
Action to take: Patient investors may like shares here. Besides a reasonable valuation and growth prospects, shares yield about 0.9 percent at current levels, with room for plenty of capital gains in the years ahead.
For traders, the April $130 calls, last going for about $3.00, offer mid-double-digit returns going forward from here. Shares have been in an uptrend, and look set to continue following the stock’s earnings beat.
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.