Your debts are under control, your emergency fund is fully funded, and you are maxing out your retirement savings. And, lucky you, you still have $1,000 left over to invest in stocks. There are options.
You could gain instant exposure to shares of hundreds of companies by plowing the money into a low-cost fund that tracks the Standard & Poor’s 500-stock index fund such as the SPDR S&P 500 ETF (symbol SPY). Simple and cheap. Or, you could buy a single share of a high-priced stock like Amazon.com (AMZN) and you might not even have enough left over to cover your $99 Amazon Prime membership fee. But it’s risky putting all of your eggs in one basket. Another approach is to spread the money over several promising low-priced stocks.
Shares in semiconductor manufacturer Advanced Micro Devices tumbled on May 2, a day after earnings for the first quarter failed to exceed analysts’ expectations. That disappointed momentum traders who had bid up AMD nearly fourfold over the past year. But for long-term investors willing to take a risk, this setback affords a chance to bet on AMD’s prospects at a considerably lower price level.
“Overall, though the stock will likely be weak in overreaction to the results, we believe a host of positive catalysts are still to come during the remainder of 2017 and our buy thesis remains very much intact,” said analysts at Canaccord Genuity.
AMD is concentrating on the market for graphics processing units (GPUs) — the brains that allow computers to render images — because of the growth prospects. GPUs are in heavy demand by rapidly expanding industries such as data centers, gaming and virtual reality. At the same time, AMD continues to compete with Intel (INTC) in the traditional business of making central processing units for computers.
The company is a leader in the gaming market, being the sole supplier of certain custom chips for both Microsoft’s Xbox One and Sony’s PlayStation 4. As such, AMD is set to benefit from Microsoft’s launch of its new Scorpio gaming console later this year. Don’t be surprised is a successful debut of the console system gives AMD stock a boost.
Analysts at Stifel, who rate shares at hold, say the company is on track for market-share gains and forecast a return to profitability on an adjusted basis this year. (AMD lost 4 cents a share on an adjusted basis in the first quarter.) More broadly, analysts who track AMD are split between high optimism and caution. Of the 18 analysts surveyed by Zacks, nine call it a strong buy, eight say it’s a hold and one has it at strong sell.