If you're asking, "Is AMD stock a buy?", the answer depends on your strategy and market outlook. With AMD's stock price currently sitting at $129.01, it recently dipped to $115.91 during premarket trading on December 24th, showcasing the importance of setting buy orders for afterhours sessions. Missing such opportunities can result in leaving profits on the table if the stock rebounds sharply.
Based on a combination of institutional volume profiles and VWAP (Volume Weighted Average Price) analysis, here’s a buy-the-dip plan tailored for swing traders who are considering AMD as a potential buy:
First Buy Zone:
Price: $124.69Shares: 25 (14.29% of total position)Cost: $3,117Price: $123.35Shares: 50 (28.57% of total position)Cost: $6,168
Third Buy Zone:
Price: $119.80Shares: 100 (57.14% of total position)Cost: $11,980If all buy orders are filled:
WAP=121.51text{WAP}=121.51To manage risk:
Stop-Loss Price: $117.87 (3% below WAP)Risk per Share: $3.65Total Risk for Full Position: $637.94Set a primary take-profit target of $147.03 (21% above WAP).
Reward per Share: $25.52Total Reward for Full Position: $5,103.54This plan achieves a reward-to-risk ratio of approximately 8:1, making it an attractive proposition for swing traders.
Institutional Interest:Key buy zones align with institutional volume profiles and VWAP levels, where shorts may cover their positions, and new long positions (possibly from institutions) could step in to prevent further declines.
Recent Performance:AMD has faced significant declines recently, dropping 10.41% in the past week and 14.49% in the past month. This has created potential buy-the-dip opportunities for those who believe in AMD's long-term growth story.
When assessing AMD stock's current valuation, key valuation ratios such as Price-to-Earnings (P/E), Price-to-Sales (P/S), Price-to-Cash Flow (P/CF), and Price-to-Book (P/B) ratios provide valuable insights into how the stock is priced relative to its financial metrics. Below is a snapshot of AMD’s valuation metrics, comparing the current quarter with the previous quarter.
Key Takeaways for AMD's Current Valuation
P/E Ratio:A significant drop from 147.02 to 107.91 suggests that AMD is becoming more attractive from an earnings perspective. This could be due to higher earnings expectations or a pullback in the stock price.
P/CF Ratio:The drop from 126.65 to 92.96 suggests AMD's cash flow generation has improved relative to its stock price, enhancing the stock's fundamental appeal.
The decline in AMD's valuation ratios, combined with the stock's recent dip, suggests that the stock is becoming more attractive for investors, particularly those with a long-term outlook. These improved metrics may appeal to both value and growth investors, especially if AMD continues to demonstrate strong earnings and revenue growth in the upcoming earnings report (due in 29 days).
So, Is AMD Stock a Buy?
While AMD’s recent performance may raise concerns, this buy-the-dip plan offers ENTRY POINTS TO CONSIDER, AS WELL AS A STOP AND TAKE PROFIT TARGET a disciplined approach for swing traders looking to capitalize on potential rebounds. Remember, this plan assumes AMD's price will dip to the outlined levels, but there's no guarantee it will. Always trade at your own discretion and risk, ensuring your strategy aligns with your financial goals. Visit ForexLive.com for additonal views.
This article was written by Itai Levitan at www.forexlive.com. Read More Details
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