The Stock to Buy for Under $2 (AMD)

IN AND OUT INVESTING - Mastery

Under $2. Worth a gamble.

Advanced Micro Devices (AMD) is now trading for under $2. It hit a new 52-week low of $1.92. The stock hasn't been this low since 2012.

Before you sell the farm (which you don't for AMD) consider that AMD is a falling knife. Year-to-date the stock is down 28%. Worse yet for long term investors they have lost 59% in the past 12 months. The stock sucks and the chart shows it.

The latest analyst action which came last week priced the stock between $2.25 to $2.50. If the stock can go to $2.25 in the next year from today's price that's a 17% return.  The short float is high at around 15% for AMD. There's plenty not to like but considering it's Q2 2015 earnings call is this afternoon why not throw down a few bucks?

ul-15-15 Initiated Mizuho Neutral $2.25
Jul-07-15 Reiterated UBS Sell $2.20 → $2
Jul-07-15 Reiterated MKM Partners Neutral $3.20 → $2.50
Jul-07-15 Reiterated FBR Capital Mkt Perform $3 → $2.50

The reason is it could get really ugly should AMD piss off the Street on the earnings call.  Any sort of beat this afternoon and AMD jumps 4 to 6%.  A miss and AMD will fall to a new all-time low. Investors (more like day traders) may be considering a AMD beat based on Intel's (INTC) decent earnings call yesterday.  Historically speaking AMD has trailed INTC and any longs are hoping that's the case for Q2. 

Intel reported the following yesterday:

  • Intel (NASDAQ:INTC): Q2 EPS of $0.55 beats by $0.05.
  • Revenue of $13.2B (-4.6% Y/Y) beats by $160M.
  • Expects Q3 revenue of $14.3B (+/- $500M), above a $14.1B consensus at the midpoint.
  • Expects 2015 revenue to be down 1% Y/Y, better than a consensus for a 2% drop.
  • Shares +7.9% AH.

AMD Advanced Micro Devices, Inc. daily Stock Chart  

Bottom line: AMD reports after the close today, either it tanks or rockets. Roll the dice.