I'd like to discuss AMD. Well aware of the obstacles it has to face, such as a return to profitability and declining PC sales, I am confident in the company's turnaround ability within the following years. When it comes to technology, investors love to over value the sector and I believe that AMD is no exception.
By developing semi-custom chips and expanding into new markets, like servers, I believe that AMD is focusing on the right things that are conducive for a turnaround. Despite the hazy future for chipmakers, I predict that a single, substantive catalyst is all the company needs to double the stock within the next years.
From mergers to partnerships or new niches, AMD is bound to do something right these upcoming years. However, a lack of promise comes with my previous statement, but common sense dictates that a Silicon Valley stalwart should not go down any time soon and will learn to thrive once again.
After a recent uptrend, AMD sits at a month high of $3.64 and a modest pullback should be expected. As the chart indicates, an upper Bollinger Band of $6.32 predicts a target price for this particular company.
With that said, a 5 year projection gives AMD ample time to prosper once again. This means that I predict some substantive catalyst is bound to occur and double the share price or beyond. Using the previous target price of $6.32 and a 5 year period, AMD can potentially produce a modest 14.7% average return for those stomaching the risk.
Furthermore, a multi-year high of $40 indicates that there are a few investors out there that wouldn't mind seeing the stock hit double digits once again. In this case, investors willing to allocate some risk into the company have the potential of a +20% average yield within the next 5 years.
I realize that this article is devoid of the usual Wall Street jargon and poorly reflects my abilities as an analyst. The analysis of all the financial statements are already out there, I just want to remind people that, in the long term, the quarterly reports and return to profitability worries are just noise. For now, let the shorts put their two cents and try to drive the stock down. The long term will only unveil the inevitable and exuberant optimism that will drive the stock price up to double digits once again.
Disclosure: I am long AMD.