Applied Materials (AMAT) may double in share price in the longer term, with possibilities to reach $25, says Todd C. Ahlsten, Chief Investment Officer and Portfolio Manager at Parnassus Investments. He says AMAT is currently one of his key holdings, and the stock shows a wide moat and long term potential.
“We think [AMAT has] a good management, and they’ve built the business for the long term,” Ahlsten said. “Regarding valuation, we think the stock is at undervalued levels, trading at $11 per share, and we see downside to the $8 level and upside to $25. So the range of outcomes looks positive for us.”
Ahlsten says Applied Materials makes process equipment to manufacture computer chips, which is increasing in relevancy as computer devices require faster and longer-lasting chips that are increasingly more difficult to build, and the company also manufactures materials required for the solar industry.
“The wide moat is that there’s only a few companies in the world that know to make these process chambers, and when they get designed in at Intel (INTC) to build computer chips, usually those contracts last for years, and it’s really hard to displace people,” he said, and he adds. “Applied Materials meets our relevancy, moat, management and range of outcomes, and also has a really unique opportunity long term to provide critical leading-edge technology to the solar industry.”
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