Brooke ThackrayApplied MaterialsAMATSELLFeb 20, 2014

Their semis capital equipment business is in a long-term bull market, because of the widespread chip shortage.

There's a shortage of semis, therefore a shortage of semi manufacturing materials that AMAT makes. 

Is up 179% this year. They can't produce enough semis equipment (so are their peers).

This one got away from him. Is up 49% in the past 3 months in a parabolic chart. Take some profits.

Buys back a lot of shares, reducing share count by 31% since end-2015. Is up 52% this year, and 1,274% over 10 years.

Mainly hardware. Competitors are LRCX and KLAC. Manufactures and sells the presses that INTC, Samsung, and TSM will buy to make chips. Also has a software side. Runway of only $270 for 12-month price target. Buy here around $239, add ~$225, and again ~$205. Yield is 0.77%.

It is well balanced between different sectors and good for the long term. His preference is KLA Tencore (KLAC) which is dominant in the space. It is up 29% over the year so you could step in now.

Likes this space, but big names like this and LAM are part of the ETFs, so automatically rise whether that stock should be bought or not. Can be volatile, like last April. Prefers buying on weakness, holding a few years, then selling.

Had a decent quarter, but terrible guidance, 10% below the street in a sector that should be humming (semis equipment). AMAT has responded negatively for the last 6 quarters. Is not performing. He sold.

Peers Lam Research and KLA Corp are performing well, but AMAT is an anomaly, not executing.

Is breaking out and their runway is long, given the AI boom.

It ranks #3 in its sector. They have a lot of exposure to China, which worries many.

It reports Thursday. Watch for the decline on revenues from China YOY. When LAM Research reported, AMAT rose. Options imply a 6% move.

Watch for the decline on revenues from China YOY, but the worse has been priced in already.

Potential topping pattern. Could be the top of the recent strength. Would not recommend buying at this time. Wait for trend to reverse upwards.