Dykstra: Back to the Tech Well With AMAT
08/14/06 - 11:37 AM EDT
Lenny Dykstra
Last week, I went out on a limb and wrote about Cisco (CSCO Quote - Cramer on CSCO - Stock Picks) calls a day ahead of the company's quarterly earnings report.
Because that pick worked out pretty well -- the stock soared Wednesday after Cisco's strong results and upbeat guidance -- I'm going back to the tech well this week with another big-cap name that's undervalued and primed to rally on its forthcoming results. Applied Materials (AMAT Quote - Cramer on AMAT - Stock Picks) is set to report earnings Tuesday. Like Cisco last week, I expect Applied Materials to post a solid number that will please the Street. This is another cast-iron company, making boatloads of money and trading well below its fair value. And good news is on the way. Global sales of chip-making equipment rose at their highest percentage growth in 21 months in June, the Semiconductor Equipment Association of Japan (SEAJ) reported Monday. SEAJ, which compiles monthly data with another industry group, California-based Semiconductor Equipment and Materials International (SEMI), also said sales of tools used to make microchips jumped to $3.99 billion in June, up 50% from a year earlier, while orders for chip equipment rose more than 90% from a year earlier. A rise in orders is good news for chip-gear makers' revenues three-to-six months ahead, an SEAJ spokesman said, according to Reuters. Even better, "demand expected to grow still further in the next quarter," the chip industry group said, citing strong demand for mobile phones, digital music players and flat-screen TVs.
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