Monday, August 13, 2012

Applying Short Sell on this Technology Stock

The US stock market is at major resistance and critical junctures right now trying to figure out or decide if its heading higher or rolling over to the downside. We think its going lower longer-term, and very possibly significantly lower over time. Our stock pick this week is a short-sell on Applied Materials.

Wall Street Cheat Sheet reports that S&P 500 component Applied Materials will unveil its latest earnings on Wednesday, August 15, 2012. Applied Materials manufacturers and produces capital equipments, and it provides manufacturing equipment, software, and solutions for the global semiconductor, flat panel liquid crystal displays, solar, and related industries.

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 22 cents per share, a decline of 37.1% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 26 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 25 cents during the last month. For the year, analysts are projecting net income of 80 cents per share, a decline of 38.5% from last year.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 3 cents, reporting profit of 27 cents per share against a mean estimate of net income of 24 cents per share.

Wall St. Revenue Expectations: Analysts predict a decline of 16.8% in revenue from the year-earlier quarter to $2.32 billion.

Stock Price Performance: From July 12, 2012 to August 9, 2012, the stock price rose $1.52 (14.7%), from $10.37 to $11.89. The stock price saw one of its best stretches over the last year between March 6, 2012 and March 19, 2012, when shares rose for 10 straight days, increasing 6.9% (+82 cents) over that span. It saw one of its worst periods between April 27, 2012 and May 18, 2012 when shares fell for 16 straight days, dropping 13.9% (-$1.67) over that span.

Analyst Ratings: There are mostly holds on the stock with 10 of 17 analysts surveyed giving that rating.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.37 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands.

Zacks Investment Research has a #5 rank on Applied Materials which is strong sell signal.

Invest2Success has a short-sell trade plan below on Applied Materials.

Sell Short Applied Materials – Ticker AMAT

Sell Entry: 12.13 to 11.59

Stop-Loss: 12.80

Take Profit Areas: 9.94 to 9.65, 9.00 to 8.73, 7.01 to 6.83

Applied Materials Company Profile

Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic (PV), and related industries worldwide. The company’s Silicon Systems Group segment offers a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. This segment provides systems that perform primary processes used in chip fabrication, including atomic layer deposition, chemical vapor deposition, physical vapor deposition, electrochemical deposition, rapid thermal processing, chemical mechanical planarization, wet cleaning, and wafer metrology and inspection, as well as systems that etch or inspect circuit patterns on masks used in the photolithography process. Its Applied Global Services segment offers products and services designed to enhance the performance and productivity, and reduce the environmental impact of the fab operations of semiconductor, liquid crystal displays (LCDs), and solar PV manufacturers. The company’s Display segment provides products for manufacturing thin film transistor LCDs for televisions, personal computers (PCs), tablet PCs, smartphones, and other consumer-oriented electronic applications. Its Energy and Environmental Solutions segment offers manufacturing systems for the generation and conservation of energy, as well as manufacturing solutions for wafer-based crystalline silicon applications. This segment also provides roll-to-roll vacuum Web coating systems for deposition of a range of films on flexible substrates for functional, aesthetic, or optical properties; and roll-to-roll machine for depositing ultra-thin aluminum films for flexible packaging applications. The company serves manufacturers of semiconductor wafers and chips, flat panel LCDs, solar PV cells and modules, and other electronic devices. Applied Materials, Inc. was founded in 1967 and is headquartered in Santa Clara, California.

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