Should You Investigate Advanced Micro Devices, Inc. (NASDAQ:AMD) At US$102?
Advanced Micro Devices, Inc. (NASDAQ:AMD) saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$129 and falling to the lows of US$102. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Advanced Micro Devices' current trading price of US$102 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Advanced Micro Devices’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Advanced Micro Devices
What's The Opportunity In Advanced Micro Devices?
According to my valuation model, Advanced Micro Devices seems to be fairly priced at around 17.77% above my intrinsic value, which means if you buy Advanced Micro Devices today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $86.82, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Advanced Micro Devices’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Advanced Micro Devices look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In Advanced Micro Devices' case, its revenues over the next few years are expected to grow by 52%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in AMD’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on AMD, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 1 warning sign for Advanced Micro Devices you should be aware of.
If you are no longer interested in Advanced Micro Devices, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
