Applied Materials (AMAT)

Continues to have a strong buyback. Don’t see a lot of growth. All in, he doesn’t like it at these levels.

The major components in developing a semi-conductor foundry are from companies like this. With the Chinese building new facilities there is enormous demand for the equipment that AMAT-O produces. The question is will the demand continue? The time to buy was 2015. This is a better trade than a long term hold. You could consider shorting it when it starts to show weakness.

It has pulled back to a breakpoint value. This is the third time it bounced here. Upside is about 30%. If you are comfortable with the market then it is okay to roll the dice on it.

Semi-conductors have become volatile in the past few weeks. Money is leaking away from some financials, though it's not a major problem. People are finding cash to buy energy and materials. Semis will be okay and perform well.

Sells and operates equipment to semi-conductor companies. A great business. The world is moving in their direction as more value comes from semi-conductors which are appearing in more and more products like cars. This is all a tailwind.

All semi-conductors are getting hit. Rose 50% over the part year, and now dropping 10%. Not a fans of semis. Expect more cyclicality and volatility, if you hold. Holding is fine. These stocks can drop quickly.

He knows this company well. It provides equipment to the semi-conductor sector. As the tariff threat against China has heated up, the company is at risk since 19% of their sales is to China. He owns it based on the current valuation.

Semi-conductor stocks move so much in a week, though Applied has shot up. Tech (computer chips) is broadening across many industries and applications--where there's a huge secular theme. Trading at only 12-13x, so it's not expensive. But this is a cycle, so beware of a sudden breakdown in the market when this will certainly go down. He's stepped out of semis last summer and entered instead the internet. They just started another buyback, so they're doing everything right. This is a high-beta name.

You are going to more of a spend right now in this sector. You could do worse in applied materials.

Shows an uptrend which is possibly breaking, or the chart might be showing a double top. There is a neckline at about 48. The stock is about 48 now. If it goes down further, it is breaking the trend. If it rebounds to the trend line, consider it but it looks dangerous at this time.

On a daily chart, you might have a cross on the 10 and 21 day. The base seems to be at around $48-$49, and the chart indicates we are making higher highs and higher lows.

There are 4 big trends in tech. Big data, enhanced smart phone sales, the internet of things and artificial intelligence. They serve all these markets. He thinks it has a pretty reasonable multiple, and good growth. (Analysts’ target: $68.50).

The world's largest provider of manufacturing equipment, service and software to the global semiconductor industry. Beyond semiconductors, they are the leading supplier of manufacturing tools for flat-panel displays, LEDs, LCDs and OLDEs (a new thing), which will become foldable OLDEs in the future, and will lead to more demand for their products. Also, solar energy devices. Instead of trying to choose which semiconductor company will do the best, choose the one that supplies to all of them. The PC Internet era is maturing now, but now we are looking forward to the growth of mobile and social media usage. That will create demand for chips. Trading at 14X forward earnings with a 15% long-term growth rate, which is pretty cheap. Dividend yield of 0.7%. (Analysts' price target is $68.50.)

Chart shows a long upward trend from 2016, and the stock is still on trend. It bounced off the trend line recently. The trend is still up, so if you can tolerate the volatility, you are probably okay.

There are 4 key structural themes in technology. Cloud-based computing, software as a service, the Internet of Things. This makes equipment that makes semiconductors. Estimates are that the average house will have 17 connected devices over the next 3 years. From early to the middle of October, the market started to consolidate. While the percentage of stocks in uptrends didn’t deteriorate, it went from 78% of stocks with positive weekly price momentum down to 30%. In the last 3 days, the leadership groups have re-accelerated, broke out and made new highs. This company fits right into that camp.