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2-Star Stocks Poised to Plunge: AMD?

Wed, 03/18/2009 - 15:29 by Todd Wenning
Based on the aggregated intelligence of 130,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, embattled chip maker Advanced Micro Devices (NYSE: AMD) has received the distressing two-star ranking.
2-Star Stocks Poised to Plunge: AMD?Get original file (6KB)

With that in mind, let's take a closer look at AMD's business and see what CAPS investors are saying about the stock right now.

AMD facts

Headquarters (founded)

Sunnyvale, California (1969)

Market Cap

$1.51 billion

Industry

Semiconductors

TTM Revenue

$5.81 billion

Management

CEO Derrick Meyer (since 2008)

CFO Robert Rivet (since 2000)

Return on Capital (average, last five years and TTM)

(1.6%) and (8.8%)

Competitors

Intel (Nasdaq: INTC),

NVIDIA (Nasdaq: NVDA),

Analog Devices (NYSE: ADI)

CAPS members bearish on AMD also bearish on

Citigroup (NYSE: C),

General Motors (NYSE: GM)

CAPS members bullish on AMD also bullish on

Apple (Nasdaq: AAPL)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 184 of the 639 All-Star members who have rated AMD -- or 29% -- believe the stock will underperform the S&P 500 going forward. Among the entire bear population are dexion10, who is ranked in the top 2% of our community, and TAG042404.

Five days ago, dexion10 summed up the growing concerns of our community: "too much debt for the equity to survive and too little sales volume for operating profits not to nose dive."

In a pitch from January, TAG042404 offers a semi-glimmer of hope, but sides with the bear camp, nonetheless:

AMD, good history of products, but in a global recession companies like AMD have a hard time getting the necessary traction. I am unsure how AMD still remains solvent with approximately 2 years of negative EPS. This could be a great speculative stock at the current prices, but could be a trap. I feel AMD will have a tough time in the short term market, but if they can provide a new product that truly challenges AMD CPUs recent performances, they have a chance.

Copyright © 2008 Universal Press Syndicate.