Back into a Semiconductor Play and Booking 227.44% Option Gains

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This week’s Alpha Algorithm recommendation returns us to another stock in the red-hot semiconductor sector in which you’ve already booked several double-digit-percentage gains over the past year.

Founded in 1967 and headquartered in Santa Clara, California, Applied Materials, Inc. (AMAT) provides manufacturing equipment, services and software to the semiconductor, display, solar photovoltaic (PV) and related industries worldwide. The company serves manufacturers of semiconductor wafers and chips, liquid crystal and other displays, solar PV cells and modules and other electronic devices.

Applied Materials, Inc. (AMAT) vs. the S&P 500 year to date.

12 Top Investment Strategies Betting on Applied Materials, Inc. (AMAT)

  1. Momentum Factor

The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which historically has driven a significant part of companies’ risk and return.

  1. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

  1. Pure Growth

The company is part of a strategy that selects companies from the S&P 500 Index, based on three growth factors: current internal growth rate, historical earnings per share (EPS) growth and historical sales/share growth.

  1. Large-Cap Growth

The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.

  1. Large-Cap Alpha Growth

Applied Materials has been chosen as part of an alpha-seeking index that selects and weights growth stocks from the S&P 500 Growth Index. The proprietary methodology uses price appreciation — among more traditional factors — and weights the constituents based on their respective growth scores.

  1. Value Line 100

It is one of the top 100 stocks in the universe of 1,700 stocks for which Value Line gives a #1 ranking in the Value Line Timeliness Ranking System, based on expected price performance over the following six to 12 months.

  1. Exponential Technologies

The stock is part of a strategy that invests in nine different fields deemed to be vast growth “exponential technologies”: big data and analytics, nanotechnology, medicine, networks, energy and environmental systems, robotics, 3-D printing, bioinformatics and financial services.

  1. IBD Top Fifty

Applied Materials is a Top 50 stock based on Investor’s Business Daily’s proprietary trading formula to identify 50 stocks that meet one of seven different catalysts. The “CAN SLIM” strategy identifies companies with either fundamental (improving earnings or new product) or technical (upward stock move on strong volume) catalysts.

  1. Share Buybacks

The company’s outstanding shares have been reduced by at least 5% in the previous year through share repurchases.

  1. Large-Cap Alpha Core

The stock is one of a tiered equal-weighted index of large-cap stocks selected from the S&P 500 that is expected to outperform the broader large-cap space based on an intricate methodology of ranking stocks, according to their recent performance.

  1. Shareholder Yield

It is one of the companies (a) paying cash dividends, (b) engaging in net share repurchases and (c) paying down balance-sheet debt.

  1. High-Quality Stock

The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.


Buy Applied Materials, Inc. (AMAT) at market today and place your initial stop at $48.50.

If you want to play the options, I recommend January 2018 $55.00 calls (AMAT180119C00055000), which last traded at $4.27 and expire on Jan. 19.

Portfolio Update

Option Sale

Sell all of your Apple Inc. (AAPL) December $155 calls (AAPL171215C00155000), which last traded at $21.12 for a $227.44% gain.

Option Purchase

With retailers technically oversold, this may be a good time to speculate on a rebound in the sector.

So I am recommending you buy the Home Depot (HD) February $165 calls (HD180216C00165000), which last traded at $5.52 and expire on Feb. 16.

Stop Adjustment
Raise your stop in PayPal Holdings (PYPL) to $70.50 to lock in at least a 30% gain.

Raise your stop in McDonald’s Corp. (MCD) to $165.05 to lock in at least a 15% gain.

Raise your stop in Microsoft Corp. (MSFT) to $82.25 to lock in at least a 15% gain.

Raise your stop in Apple (AAPL) to $169.45 to lock in at least a 10% gain.

Raise your stop in (AMZN) to $1,102 to lock in at least a 10% gain.

Stock Sale

You were stopped out of Priceline Group (PCLN) on Nov. 7 at $1,746.70 for a 9.69% loss.

You were stopped out of Micron Technology (MU) on Nov. 6 at $43.15 for a 20.09% gain.


Nicholas Vardy

Nicholas A. Vardy

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