Finally, a glimmer of hope for AMD bulls. With a relatively cheap valuation in terms of free-cash-flow-to-equity versus its goliath competitors, AMD appears to be fairly stable in terms of cash flow. Investors should also take this number with a grain of salt since two of the three quarters that drive this number show a negative reading. This erratic cash flow isn't a recent trend, either. Intel is far from sainthood in regard to free-cash-flow -- it posted a negative free-cash-flow of $1.2 billion in the first quarter of 2009 before snapping back in the following two quarters.

AMD has seen a great deal of price appreciation in the past few months, and much of that increase isn't justified by fundamental support. The stock seems more like a speculative bet than something to buy as part of a value-oriented portfolio. Even if AMD surprises with its earnings release, consider passing until performance supports the valuations. If you want to play the chipmakers, look at Intel over AMD.

-- Reported by David MacDougall in Boston.
Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.

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