With tech stocks largely back in fashion, there are a few laggards out there. They may be the better opportunity going forward. That’s because laggards have better valuations, having not run up as much. And they may surprise investors with strong operational performance.
That’s especially true when contrasting some of the biggest players year-to-date, and especially where investors aren’t that excited for a specific company at the moment. Investors don’t need to find the most boring stock, just one that’s less exciting.
One example is Advanced Micro Devices (AMD). The chipmaker is up this year, but has only moved up about 50 percent compared to a double for Nvidia (NVDA). And the market recently panned the company’s latest chip launch which would directly compete with Nvidia.
Yet AMD is a far better bargain than Nvidia here. Shares trade at 9 times their price to sales, as opposed to 40 times for Nvidia. And while Nivida trades at 220 times earnings, AMD looks like a value at 44 times forward earnings.
Action to take: From current valuations, AMD looks like a relative winner here. Shares can likely continue to move higher. Investors should use a big down day for shares to build a position. AMD doesn’t pay a dividend right now, but should see solid long-term growth.
For traders, shares are in a long-term uptrend and moving higher. The September $140 calls, last going for about $7.75, could see mid-double-digit returns in the coming months.
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.