For most poker players, sitting and waiting is part of the game. The best players wait out those premium hands for perfect opportunities. For you non poker players, premium hands are those two cards your dealt (A-A. A-Ks, K-K, A-Qs, Q-Q, A-Js, J-J, 10-10 A-10s), which offer a high probability of winning without seeing the next dealt three cards. There are also situational plays you make in poker, but that takes both practice of timing and understanding of positioning. Although premium hands are easy to play, truly my favorite hands to play are suited connectors, 8-9s, 7-8s, 7-6s, 6-5s, 5-4s 4-3s, 2-3s. However there is only a few times I'll play these unwanted hands. If the table has been tight (not much betting) and if I'm near the dealer/last to play with more than half the table already in the pot. What often happens everyone is playing premium hands, and there's a high probability that lower cards are dealt out by the dealer. I've won some monster pots with this strategy, knocking out triple Aces/Kings/Queens, with a straight or two pair vs A-A, K-K or Q-Q. The pots are often high, because no one considers to be going up against low suited connectors.
For AMD a poker analogy fits well for both stock and options. AMD stock and options has been going down significantly (tight table). AMD is no doubt a sneaky low hand that no one is really considering to be a monster play. We do have a few tells to give us information about AMD's chances of hitting a big pot with stock options. Before former CEO of AMD Rory Read left after 4 years, he told us AMD still has to get through 18 months of old technology before new chips are available. Well Mr. Read stated this on Sept. 4th, 2014, giving us a window of late 2015 to early 2016 as a time when we could see big announcements. Perhaps those APU's, we've been waiting for in mobile devices and tablets. Mobile and Tablet SoC's would greatly help build big revenues for AMD , taking share from MediaTek, Qualcome, Nvadia, and Intel . AMD has been working with ARM Holdings and Oracle (java9/JDK-JRE) for almost three years now, building an ARM/AMD Hierofalcon server system. If the ARM/AMD new server system is as big as the hype, they could take large market share quickly from Intel . AMD could also gain traction in desktop CPU's as well, where Intel pretty much has a monopoly, and where company's like Apple are looking for an alternative.
For investment, I would start buying shares of AMD in the 2.05 to 1.70 range. If we trade below 1.70 support, I would wait to see where this last leg takes us. Although I find it hard to believe AMD will go much lower than 2.00. AMD recently restructured it's debts and has enough cash to last through 2020. AMD revenues are growing and expenses are in check, plus they have new products coming on-line, just at a later date than most wanted.
Strategy for Big Pot
For a chance to take down a big pot, I would play an option bet after waiting for those HV, IV signals I mentioned. For now, 3.50 Jan. 2017 calls or April-June 2016 (when they come available) might be the best bet. If IV goes below HV, when HV 30 reaches historical lows and AMD stock trades near 2.00 sometime late 2015 (December), I imagine Jan. 3.50 options will be selling for .10 or possibly less and April 2.50 Calls near a penny.
Also important to note, is the fact that AMD has been holding 20 to 25% short interest for several years. If AMD does become complacent at the 2.00 level, this could cause shorts to get nervous and start covering while new AMD investors start buying up shares. If this would happen I would guess that AMD will start moving higher later next summer, rather than late next year.
1990 was the lowest HV (30) reading ~20.0
Entry: 1.80 to 2.05
Time of Entry: Implied ~20/25
My biggest concern is SO count and further dilution. I'd like to see Lisa Su announce a share buyback next year after all the cost cutting.
Jim Guilford lead Intel chip engineer, even spoke about HSA earlier this year, and admits Intel made a mistake by not going in the direction of parallel computing (HSA). AMD led the charge to put the HSA foundation together and looks to capitalize 2016 and beyond.
This might look unrealistic to many, however if you have been following AMD stock, over the years you'll notice price reacts quicker on the way up than on the way down. This is the opposite of the general idea of most underlying stocks and indexes. With fast rising prices like AMD stock tends to have, you also get a big multiple on volatility. With AMD price near historical lows and volatility starting to follow historical territory, we could get a chance of a lifetime with AMD Call Options. Earnings dates are very important to AMD, as you can see in the chart. Once we get one very positive earnings release, news will matter again. PR with updates on AMD future technology will push share price higher, and with a second confirming positive earnings, AMD share price will move even faster.
Book Value is an easy evaluation method, share price / equity (assets - liabilities). However, BV does not include patents, brand name, goodwill and other intellectual property. AMD assets are mostly patents. It is difficult for companies to put a dollar amount on patents, but it's said that AMD patent portfolio is somewhere between 1.5 to 2.2 billion. With those evaluations that means AMD currently priced near or below book value.
Early 2013 AMD had about the same BV. Since that time AMD has evolved it's business model, and earns much of it's profits with semi custom chips. Plus since 2013 AMD has developed very close relationships with Apple and ARMH, strategic partnerships another asset that can be priced on BV.
@JR, check the phases. Large DSS phase is topping over and the short phase is about to cross positively. This short phase should allow a small spring upwards but when this large phase crosses negatively, price will be in a compression. When that compression is over I think you will see the upward trends you are looking for. I will be watching this stock as well, looking for the opportunity to add it in the portfolio for a long time.
For AMD I also looked at product pipeline and competitions products, improving my analysis to forecast future earnings and revenue (fundamentals). I'm getting better odds with all this analysis.
With this, why wont indicators update with the chart when you hit Play? really annoying and ...kinda makes charts lose usefulness because people cant quite check the outcome regarding indicators if you check the chart later on.
Another view of sector comparison, SOXX vs AMD. You can see AMD typically follows the SOXX, however the trend has been fading.
Where as Intel and Nvidia have improved in comparison to the overall Semiconductor Index SOXX
This expected overall semiconductor slowdown in 2016 could keep AMD from reaching it's expected share price valuation, mainly because many funds insert money into indexes rather than individual stocks. However, I still am going to hold out for early 2016 for AMD to improve overall fundamentals and therefore improving share price.