On March 23rd of this year we went into detail with our individual analysis of Applied Material (AMAT) in an article titled “Research Request: Applied Material (AMAT).” At the time, Applied Material (AMAT) was trading at $13.24. In a section of the article titled “So What Would We Do?” we outlined our investment strategy on Applied Material.
Although we didn’t think that Applied Material (AMAT) was a “buy” at the time, we did give steps on how to go about buying the stock. The last paragraph of the article said the following:
“For anyone who believes that this is an opportunity that can't be missed, I recommend allocating 15% of your portfolio into this name. On top of that, do a two part purchase. First buy 7.5% now and if the shares fall another 20% buy the remaining 7.5% later. This way, the cost basis of the stock would require only a 10% rise to break even. Again, it is not likely that we'll buy AMAT since the alternatives provide exceptional opportunity with less downside risk.”
Based on the two-part purchase strategy that we mentioned, the average purchase price would have been $11.92. The gain for the stock would be 17.45% so far. Had only one purchase been made based on a decline of 20% from the $13.24 level, the total gain would be 32.20%.
We hope that our work on this topic has proven to be profitable for those who regularly read our site. For those who have taken advantage of this investment opportunity, please re-read our March 22nd and March 23rd postings for indicated upside resistance levels and potential exit points.
