3 ‘Tech Wreck’ Stocks That Are Ready to Bounce Back

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It’s a rare sour day for Apple Inc. (NASDAQ:AAPL), while investors also dare to sell Facebook Inc (NASDAQ:FB) and other high-flying, large-cap tech stocks that have seemingly defied gravity in recent months.

3 'Tech Wreck' Stocks That Are Ready to Bounce Back

What’s behind the madness? Most likely an algo-based feeding frenzy in our opinion. But if you want a more comforting view with a bit more humanity attached and an ode to the prudent investor, I could share Susquehanna’s version of the price action being simply a function of “investors re-evaluating valuations here.”

Regardless of which account you might believe, the irony is outside the largest of large capitalization tech names, the quickly popular question of whether this might be the start of a new “Dot.bomb” for technology stocks, holds a good deal less efficacy.

What I’m referring to are smaller, but still influential, recognizable and quite often industry leaders within the broader spectrum of technology. If investors look around, it’s quickly apparent many of these tech names have already been on the proverbial chopping block over the past couple to few years and are just re-emerging as potential winners on and off the stock charts.

So without further delay, let’s take a look at three tech stocks whose situations are long overdue for some corrective comeuppance.

Tech Stocks to Buy: Advanced Micro Devices (AMD)


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Source: Charts by TradingView

Under the strong stewardship of CEO Lisa Su, AMD has been positioning itself increasingly well in key growth markets and that trend looks set to continue with new products hitting the market later this year.

One such niche which could prove a huge boon for this tech stock is the cryptocurrency market. Right now, AMD’s Polaris chips are making the company a dominant supplier in this exploding area still in its infancy, but which could become a powerful, secular trend.

On the price chart, the monthly view is able to convey, without too much effort, why AMD is looking like a good buy as well. After forging a massive triple bottoming pattern over the course of several years, AMD stock took off in 2016. It’s now offering a nice pullback opportunity after a successful test of prior resistance from 2010.

Reviewing AMD’s options, I like the October $14/$16 bull call spread. With shares at $12.28 the vertical is priced for 48 cents and requires AMD stock to modestly reassert itself within its developing uptrend. Should shares of this tech rally off technical support, a profit of $1.52, or 317%, is possibly with a slightly higher high of $16 at expiration.

Tech Stocks to Buy: FireEye (FEYE)


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Source: Charts by TradingView

And it appears investors are taking notice of that possibility, as well as solid restructuring efforts that are underway and look to make good on FEYE stock’s promise of not being a future Dot.bomb.

On the price chart, conditions are also looking up for this tech stock. The cybersecurity play hasn’t been penalized on a time basis like AMD stock, but that’s only due to company having gone public a couple years back.

On a percentage and price basis, this tech stock’s 88% spiral over the course of a couple years and into 2017, can easily be defined as a prime example of a “tech wreck” already secured. The good news is a bottom has developed. I’m not sure if there’s an actual name, but a technical leg lower followed by a heel, modest lift and eventual foot has kicked shares of FEYE stock higher and into position for a new uptrend to develop.

Reviewing FEYE’s options for a strategy, I like the September $16/$18 bull call spread. Priced for 58 cents with shares at $15.26 the slightly out-of-the-money vertical cuts the premium risk by nearly 50% compared to holding the long call outright.

If the tech stock begins to make new highs, the spread will be in-the-money and quick to overtake its expiration breakeven of $16.58. And with earnings in early August, should another bullish reaction occur, if FEYE is above $18 by the third Friday in September, the vertical can capture $1.42, or 245%.

Tech Stocks to Buy: 3D Systems (DDD)


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Source: Charts by TradingView

Back in early May investors collectively reversed an initial bearish reaction and established a massive triangle breakout in this tech stock. DDD shares continued to rally to confirm a new uptrend, but have more recently pulled back into a technical support area.

With the analyst narrative still overwhelmingly bearish and fairly high short interest of around 24%, any additional confirmation to support 3D System’s path to recovery is underway. That should prove beneficial to traders betting on a sustainable turnaround.

Reviewing this tech stock’s options, the August $22/$24 bull call spread is one to approach the current situation smartly. Priced for 48 cents, the vertical requires DDD stock to ultimately reverse its corrective action of the past couple weeks and resume its newly formed uptrend.

Should this scenario play out on the DDD price chart, this vertical can turn a profit of $1.52, or 317%, if a new high is confirmed by just more than 1% above the recent pivot of $23.70. And with earnings set for early August, any similar repeat performances would fully make good on that potential.

Investment accounts under Christopher Tyler’s management currently own positions in AMD stock and / or AMD derivatives, but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT.

The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2017/06/3-tech-wreck-stocks-that-are-ready-to-bounce-back/.

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