Revisiting a Semiconductor Play and Booking Triple-Digit Gains of 125%

This week’s Alpha Algorithm takes us back into yet another semiconductor stock, which you recently booked a double-digit-percentage gain of 10.43% in.

Founded in 1967 and headquartered in Santa Clara, California, Applied Materials, Inc. (AMAT) provides manufacturing equipment, services and software to the semiconductor, display, solar photovoltaic (PV) and related industries worldwide. The company serves manufacturers of semiconductor wafers and chips, liquid crystal and other displays, solar PV cells and modules and other electronic devices.

Applied Materials, Inc. (AMAT) vs. the S&P 500 YTD over 1 year.

Nine Top Investment Strategies Betting on Applied Materials, Inc. (AMAT)

1. Large-Cap Momentum

The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which historically has driven a significant part of companies’ risk and return.

2. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

3. Pure Growth

The company is part of a strategy that selects companies from the S&P 500 Index, based on three growth factors: current internal growth rate, historical earnings per share (EPS) growth and historical sales/share growth.

4. Large-Cap Growth

The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.

5. Large-Cap Alpha Growth

Applied Materials has been chosen as part of an alpha-seeking index that selects and weights growth stocks from the S&P 500 Growth Index. The proprietary methodology uses price appreciation — among more traditional factors — and weights the constituents based on their respective growth scores.

6. Large-Cap Growth and Value

Using a proprietary ranking based on separate models for growth and value, this is a large-cap stock that is part of an index that has historically outperformed its market-cap-weighted benchmark.

7. Exponential Technologies

The stock is part of a strategy that invests in nine different fields deemed to be vast growth “exponential technologies”: big data and analytics, nanotechnology, medicine, networks, energy and environmental systems, robotics, 3-D printing, bioinformatics and financial services.

8. IBD Top Fifty

Applied Materials is a Top 50 stock based on Investor’s Business Daily’s proprietary trading formula to identify 50 stocks that meet one of seven different catalysts. The “CAN SLIM” strategy identifies companies with either fundamental (improving earnings or new product) or technical (upward stock move on strong volume) catalysts.

9. Share Buybacks

The company’s outstanding shares have been reduced by at least 5% in the previous year through share repurchases.

Recommendation

Buy Applied Materials, Inc. (AMAT) at market today and place your initial stop at $24.50.

If you want to play the options, I recommend AMAT July $39.00 calls (AMAT170721C00039000), which last traded at $2.19 and expire on July 21.

Portfolio Update

With your Texas Instruments (TXN) April $75.00 calls (TXN170421C00075000) up 125%, sell all of your remaining options to lock in these triple-digit-percentage gains.

As the price of oil continued to stumble, you were stopped out of Chevron (CVX) last week at a loss.

Sincerely,

Nicholas A. Vardy