Friends, I am not trying to exaggerate with the title. But there’s no other way to put it when referring to Advanced Micro Devices (NASDAQ:AMD): AMD stock is a must-buy name on the dip.
This stock made a tremendous move from October to February, doubling in that timeframe. It’s not a secret what happened near the end of that span, though. The novel coronavirus came bombarding into our lives, impacting virtually every business in the world.
However, there are a few catalysts working in AMD’s favor — one of which is the fact that demand has accelerated for its products. That is the case for Nvidia (NASDAQ:NVDA) as well, as both companies are seeing a tremendously bullish situation unfold in front of them.
The Fundamentals Make Sense
Analysts expect revenue to grow 32% this year to $8.92 billion, followed by 23% growth in 2021. For earnings, consensus estimates call for blistering growth of 72%, followed by another robust year of 50% growth in 2021. It’s the exact type of red hot growth stock I like to report on with Investment Opportunities.
These numbers are fantastic, but they’re also up big from where estimates stood earlier in the year. At the start of 2020, analysts expected 2020 revenue of about $6.7 billion in sales. They now expect almost $9 billion in sales this year.
Let’s put it this way: Analysts now expect more revenue this year (2020) than they did in January for next year (2021).
The pull-ahead has been incredible and it’s not temporary; we’re not seeing a reversion next year. Even as all of this was happening, AMD stock wasn’t reacting to this new realization. We’ll cover some of the technicals in a minute, but it took until July for AMD stock to break out over its February highs.
Some may call the current rally insane; I call it deserved.
At a time when companies are struggling to grow, AMD is churning out 30%-plus revenue growth and 70% earnings growth. That kind of growth is hard enough to find without a pandemic, let alone in an economic climate ripe with volatility. It’s the type of astronomical growth you can expect from the lesser known stocks I work to identify with my expert research team on a day-to-day basis.
Further, AMD continues to benefit from the missteps of Intel (NASDAQ:INTC). The latter company recently announced a major delay to its 7nm chips, which is a direct benefit to AMD.
Growth and eating away at Intel’s market share? Those check the bullish boxes. But then you start look through the financials and AMD becomes even more attractive. In addition to top- and bottom-line growth, AMD continues to grow free cash flow, while expanding its margins. Over the last few years, it has also been reducing debt and increasing assets. This is a secular growth story with all-over improvements.
The Technicals Look Good for AMD Stock
On the chart, you can see where AMD stock topped out in February. After several attempts, the stock finally broke out over the $58 to $60 zone — and it even gave investors a chance to buy in who missed the move!
Then the Intel news regarding its 7nm chip delay sent AMD rocketing higher. A few days later, earnings were the catalyst. These types of things happen with high-quality growth stocks. Once the fundamentals and technicals align, it can be like a fireworks show.
After a quick correction from the highs, shares continue to find support in the $76 to $77.50 area. I would love to see AMD stock reclaim the 20-day moving average and resume its march toward $100.
However, should the broader market continue to swoon, investors may get a chance to buy AMD on an even larger dip. In that case, a decline to the 50-day moving average would be the first major area of interest. Beyond that, a gap-fill into the $60’s would be a great opportunity for long-term investors — if that opportunity comes around. It may not.
AMD stock is undoubtedly bound for glory … but I want to quickly bring your attention to another growth play that’s worth considering. It’s set for long-term success that’s perhaps even more impressive, only the space it focuses on is mobile communication.
While several tech titans helped lay the foundation for our hyper-connected society, this company stands to lead a technological revolution that will forever change communication on a global scale.
As InvestorPlace’s chief technology analyst, I’ve worked feverishly with our veteran research team to identify the best stocks to buy in my Investment Opportunities. Over the years, our research has helped millions get ahead of the curve. Our subscribers have enjoyed massive gains in tech titans long before they were kings.
Now, I’m ready to share with you the stock behind the next big development in communication. The company has already inked deals with key mobile phone partners. But it’s bound to become its own king with an approach to mobile interaction that we’ve never seen before … and it’s only a taste of the unique strategies and research you can expect from Investment Opportunities.
On the date of publication, Matt McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in AMD. The InvestorPlace Research Staff member did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.