This Semiconductor Stock Could Be a Bargain

KLAC stock has finished December higher nine of the past 10 years

Dec 5, 2017 at 2:35 PM
facebook twitter linkedin

It's been a rocky road for tech stocks recently, and semiconductors are no exception. While the tech sector is attempting to stage a rebound today, a handful of recently beat-up securities are trading at relative bargains, if history is any indicator. One such stock is KLA-Tencor Corp (NASDAQ:KLAC), which tends to rally in the month of December.

After touching a record high of $110.01 in early November, KLAC stock pulled back to test the round-number $100 region. What's more, the shares found support atop their 10-month moving average -- which hasn't been breached on a monthly closing basis since September 2016 -- and were last seen up 1.8% at $102.65.

Over the past 10 years, the month of December has boded well for KLAC shareholders. The security has averaged a monthly gain of 5.19%, according to Schaeffer's Senior Quantitative Analyst Rocky White. Plus, KLAC is one of only a handful of S&P 500 Index (SPX) stocks that have ended nine of the last 10 Decembers in the black. Another 5.19% rally from November's close would put the shares around $107.55 heading into 2018 -- plenty of upside room from current levels.

Despite the stock's long-term ascent, short sellers have been piling onto KLA-Tencor. Short interest surged more than 47% during the past reporting period, and now accounts for 3.73 million shares. Should December history repeat and KLAC stages a Santa Claus rally, a short squeeze could propel it even higher.

While options volume on the semiconductor stock tends to run light, on an absolute basis, it's worth noting that KLAC sports a Schaeffer's Volatility Scorecard (SVS) of 85. This lofty SVS indicates that the shares have tended to exceed options traders' volatility expectations in the past year -- an encouraging sign for would-be premium buyers.



Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Best stocks for October and worst stocks for October


Special Offers from Schaeffer's Trading Partners