Applied Materials, Inc. AMAT is currently one of the top-performing stocks in the technology sector and a rise in share price and strong fundamentals signal its bullish run. Therefore, if you haven't taken advantage of the share price appreciation yet, it's time you add the stock to your portfolio.
The company has performed extremely well this year and has the potential to carry on the momentum in the near term.
Why an Attractive Pick?
Share Price Appreciation: A glimpse of the company's price trend shows that the stock has had an impressive run on the bourses year to date. Applied has returned 75.1%, comparing favorably with the industry 's gain of 68.2%.
Solid Rank & VGM Score: Applied sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: Six estimates for the current year have moved north over the past 30 days against no southward revisions, reflecting analysts' confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year has increased 5.0%. Also, for fiscal 2019, the Zacks Consensus Estimate has inched up 3.0% over the same timeframe to $3.98.
Positive Earnings Surprise History: Applied has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a average positive earnings surprise of 2.8%.
Strong Growth Prospects: The company's Zacks Consensus Estimate for fiscal 2018 earnings of $3.86 reflects year-over-year growth of 18.9%. Moreover, earnings are expected to register 3.07% growth in fiscal 2019. The stock has long-term expected earnings per share growth rate of 16.9%.
Growth Drivers: Applied Materials is one of the world's largest suppliers of fabrication equipment to semiconductor, LCD and solar PV cell manufacturers.
In the recently concluded fiscal fourth quarter, the company's pro forma earnings per share of 93 cents beat the consensus mark by 2 cents and came in toward the higher end of the guided range of 86-94 cents. Also, revenues of $3.97 billion beat the consensus mark by $40 million and were at the high end of the guided range of $3.85-$4 billion.
Applied Materials' revenues and earnings were at an all-time high this quarter. Inflection-focused innovation strategy was the primary growth driver. The company continued to witness technological advancements in semiconductor and display areas. 3D NAND, DRAM and patterning have led to significant market share gains.
Also, Applied significantly improved on its memory market share as well. It expects robust double-digit growth in semiconductor, display and service businesses in 2018. Also, wafer fab equipment (WFE) spending in 2017 and 2018 combined is expected to be well above the previous forecast of $90 billion.
Going forward, Applied sees significant opportunities from emerging trends on the semiconductor and display fronts such as artificial intelligence, big data, cloud infrastructure, Internet of Things (IoT), virtual reality and smart vehicles.
We believe that Applied Materials is in a great position to grow sustainably and profitably based on its strong pipeline of enabling technologies, supported by expanding opportunities on the semiconductor, service and display fronts.
Applied Materials, Inc. Price and Consensus
Other Stocks to Consider
Other stocks worth considering in the broader technology sector include NVIDIA Corporation NVDA and Lam Research Corporation LRCX , both carrying a Zacks Rank #1 (Strong Buy), while Activision Blizzard ATVI , carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Long-term earnings per share growth rate for NVIDIA Corporation, Lam Research and Activision Blizzard is projected to be 11.2%, 14.9% and 13.8%, respectively.
Wall Street's Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report