Last week, I went out on a limb and wrote about Cisco ( CSCO - Get Report) 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 - Get Report) 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.

For Applied Materials, one of the major players in the industry, this should provide an interesting earnings conference call, Tuesday at 4:30 p.m. EDT.

By the way, Applied Materials is not just any old tech company -- it's been around since 1967.

Let me reel off some of Applied Materials' numbers: a forward P/E of 12.75, a PEG ratio is 0.86 (anything under 1 is flat-out incredible), and a return on equity still above its forward P/E at 13.17%. Applied Materials has $7.46 billion in revenue, a very comfortable $3.33 billion in cash, and to top it off, the company brings in over $660 million in free cash flow. The stock is already about 20% undervalued according to ValuEngine, my research Web site.

Now that we have our edge, it's time to let you know what deep-in-the-money call we're going to use to make our bet: the AMAT January $12.50 calls, for $3.30. The symbol for this particular in-the-money call is ANQ AV.

We are paying approximately 63 cents in time premium to control 1,000 shares of AMAT, and we have until January 2007 to execute our in-the-money call. If it wants to give money away, we will take it!

I am very comfortable with this trade, but just to be clear, remember: we are in the business of making money, period! This is why we set our good-till-canceled (GTC) sell order one point higher than our purchase price. Stick with the game plan and you will be rewarded.

The Game of Life

The Dodgers, riding a sustained hot streak since the All Star break, have cruised into first place in the NL West, but any of the teams in the division could conceivably win it.

While the Mets are a given in the NL East, the Cardinals' losing ways have allowed the Reds, Astros and Brewers to entertain thoughts of the NL Central divisional title.

The AL West remains up for grabs, although the A's have opened up a small lead.

The White Sox have narrowed the gap somewhat on the Tigers in the AL Central, while the Yankees and Red Sox continue to battle for AL East supremacy, with the Blue Jays within striking distance.

In case you missed it, Chase Utley, my in-the-money call last week, was just featured in Sports Illustrated, touted as the "dirtiest player in baseball." For many, that moniker conjures up images of the Georgia Peach, Ty Cobb, spikes high, sliding into second, in a very unpeachy manner.

Those in the know are aware that jargon changes with each generation. Hence, in today's vernacular an individual who is "sick," is actually gifted with extraordinary talent. A player who is "bad" is actually quite good. A pitcher who has "filthy stuff" is often unhittable.

So labeling Chase Utley the "dirtiest player in baseball" was, in fact, paying him the highest of compliments: Sports Illustrated was referring to Utley's uniform, which is forever soiled with grass, dirt and grime. Hence, this award is an acknowledgement, as well as a tribute, to the way Utley plays the game. His numbers -- batting average of .325, 96 runs, 152 hits, 21 home runs, 74 RBI -- punctuated by his recent 35-game hitting streak, speak for themselves, but his astute awareness of situations speaks even louder.

Witness the game last week, in which Utley scored from second on an infield ground out to secure a Phillies win. Everybody would love to have an Utley on their team.

August signals the intersection of football and baseball, in which the divisional races in baseball heat up and preseason games are waged in football. Many question the wisdom and need for football's preseason. Cynics point to corporate greed -- the owners making more money -- as the main motivator. Furthermore, they cite the real possibility of injuries to key players as a reason to scrap preseason games.

Nonetheless, preseason games will continue, thereby allowing coaches to evaluate their rosters, and make personnel decisions based on real game action against other teams.

Speaking of injuries, I was pleased to see that youth baseball, which encompasses ages seven through 18, is making a strong effort to limit the amount of pitches that pitchers can throw.

Obviously, the limits increase with age, but this is a necessary restraint to protect our youth. Tommy John, a great lefthander, sustained an elbow injury that ultimately resulted in a surgical technique that bears his name. Teenagers should not have to contemplate this surgery.

Medical science, as well as common sense, says that the majority of arm injuries sustained by pitchers are overuse injuries. Moreover, young Little League arms are often not developed enough to handle the increased torque necessary to throw curveballs and sliders. Nonetheless, it is not uncommon to see a teenager pitching for his school team, a travel team, and various All-Star teams.

We need to recognize that the deep-in-the-money calls on these star pitchers are usually six to eight years down the line. Thus, in order to protect our most valuable commodity, our youth, my deep-in-the-money call this week is to the physician leaders, who in conjunction with baseball's sanctioning bodies, will provide guidelines to protect the young arms that will carry us into the future.

Remember: Life is a journey, enjoy the ride!

At the time of publication, Dykstra was long Applied Materials calls, although holdings can change at any time.

Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.

Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.