Applied Materials Stock Could Be an Easy Choice for Value Investors

Shares of AMAT have dropped about 26% year-to-date

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Applied Materials, Inc. (NASDAQ:AMAT) is an American corporation that offers materials engineering solutions. On May 26, Applied Materials introduced their new Ioniq PVD System to solve wiring resistance challenges of 2D scaling. The new system re-engineers the deposition of transistor wiring to significantly reduce electrical resistance.

Applied Materials stock has lost 26% this year, and over 16% in the past six months. The shares have been struggling with pressure at the 60-day moving average, with a recent bounce off its 16-month low of $101.33, hit on May 20, losing steam at the trendline. The 80-day moving average has also lingered as a rejection level, snuffing out a rally in late-March.

Options traders, meanwhile, are incredibly bearish. This is per AMAT's 10-day put/call volume ratio of 2.04 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all other readings from the last year. In other words, put volume is more than doubling that of calls, and these contracts are getting picked up at their quickest pace in the past 12 months. 

The semiconductor company now provides a fair valuation at a price-earnings ratio of 14.83 and a forward price-earnings ratio of 13.12. AMAT also offers a dividend yield of 0.84% with a forward dividend of $0.98. In addition, Applied Materials has managed to grow its yearly revenues and net income by 70% and 150% respectively since fiscal 2019, reporting a 34% increase in revenues and a 63% increase in net income for fiscal 2021. The business is estimated to end fiscal 2022 with 10.1% revenue growth and 9.2% earnings growth. AMAT is also expected to increase revenues by 10.8% and grow earnings by a considerable 17% for fiscal 2023, making the stock a viable option for value investors.


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