Applied Materials (AMAT) reported earnings after the bell on Thursday. They came in below expectations, as did the company’s revenue forecast for the current quarter, with management citing supply chain issues.
I view this as a short-term problem. Longer-term, AMAT is the leading supplier of chip-making equipment.
“We have the orders booked, a full build plan, and a large and growing backlog. We believe unconstrained demand for wafer fab equipment would be $100 billion or more,” Chief Executive Officer Gary Dickerson noted on the earnings call.
Analysts expect the company to earn $8.05 per share this year, meaning the stock is trading at just over 13 times earnings compared to a price-to-earnings multiple of around 20 for the S&P 500.
I want to take advantage of post-earnings volatility to sell a put that is well out of the money.
Current Stock Price: $105.88
Action: Sell to open AMAT May Week Four (5/27) 97 Put for around $0.70. You can go as low as $0.52, but please don’t start there and always use limit orders.