AMAT Lost 14% In A Day. Do You Buy Or Wait?
Applied Materials (AMAT) stock is down 14.1% in a day. The stock looks fairly priced at the moment, though history suggests you may benefit from buying dips. Consider the following data:
- Size: A $131 Bil company with $28 Bil in revenue currently trading at $161.75.
- Fundamentals: Last 12 month revenue growth of 6.0% and operating margin of 29.7%.
- Liquidity: Has Debt to Equity ratio of 0.1 and Cash to Assets ratio of 0.2
- Valuation: Currently trading at P/E multiple of 19.4 and P/EBIT multiple of 15.3
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 195% within a year. See AMAT Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for AMAT, see Buy or Sell AMAT Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and AMAT drops another 20-30% to $113.23 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Applied Materials (AMAT) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: AMAT provides manufacturing equipment, services, and software for semiconductor chip fabrication and display technologies, including LCD, OLED, and other displays for various electronic devices.
2022 Inflation Shock
- AMAT stock fell 55.4% from a high of $167.00 on 14 January 2022 to $74.41 on 17 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 19 January 2024
- Since then, the stock increased to a high of $254.97 on 10 July 2024 , and currently trades at $161.75
| AMAT | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -55.4% | -25.4% |
| Time to Full Recovery | 459 days | 464 days |
2020 Covid Pandemic
- AMAT stock fell 43.6% from a high of $67.41 on 19 February 2020 to $37.99 on 20 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 14 August 2020
| AMAT | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -43.6% | -33.9% |
| Time to Full Recovery | 147 days | 148 days |
2018 Correction
- AMAT stock fell 52.9% from a high of $61.61 on 9 March 2018 to $28.99 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 November 2019
| AMAT | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -52.9% | -19.8% |
| Time to Full Recovery | 326 days | 120 days |
2008 Global Financial Crisis
- AMAT stock fell 64.5% from a high of $22.96 on 8 August 2007 to $8.14 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 7 July 2014
| AMAT | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -64.5% | -56.8% |
| Time to Full Recovery | 2055 days | 1480 days |
Worried that AMAT could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.