Is Applied Materials Stock a Buy?
The recession brought about by COVID-19 has been a unique one. While many industries that rely on in-person interaction (travel, restaurants, entertainment) are reeling, the digital economy has gotten a boost -- both from shelter-in-place and social distancing orders and Federal stimulus payments sent directly to most households and unemployed workers.
The semiconductor industry was beginning to show signs of pulling itself out of a cyclical slump at the start of 2020, and ensuing events have pushed it into boom mode. Chip equipment and materials engineer Applied Materials (NASDAQ: AMAT) has been a big beneficiary. As it is tied to manufacturing, this stock will continue to be a cyclical one sensitive to the ebbs and flows of semiconductor demand. But at this juncture, shares look like a great value -- both for the current up-cycle in tech demand and the longer-term potential for the company's business.
During its fiscal 2020 third quarter (the three months ended July 26, 2020), Applied Materials' revenue increased 23% to $4.40 billion, and net income grew 47% to $841 million. The good times are expected to keep rolling through the summer and into the autumn, with management expecting another 23% revenue increase (at the midpoint of guidance) in the fiscal fourth quarter and earnings to increase at an even faster pace.
Source Fool.com
