Advanced Micro Devices, Inc. (AMD)

jcm56 (73.33) Submitted: 10/24/06 1:18 AM : Start Price: $20.48 AMD Score: -70.59

This is a contrarian momentum play for me. I like AMD, and right now the market seems not to. Rather than follow that trend, I am betting that at some point in the next five years, AMD will "shock and awe" the industry somehow and everyone will come running, causing the price to surge. In the mean time, I have no idea what to expect from the stock price. I aim for a sell point of $40 sometime before 2009. If the price drops more without substantive cause, I just might buy more.

Risk is moderate, depending on how you define it. The chance of shares going belly up is very low. The chance of $20 being the all-time low for the next three years is also very low. However, I don't care what happens to the stock price until I am ready to sell it. (In fact, as Tom Gardner preaches, if you've done your homework, you'll find yourself hoping the stock price goes down in the short term, so you can buy more shares at a discount.)

If you wait for the good news to buy in, you miss the boat. So, I choose to buy now at close to a 52-wk low in anticipation of a change in momentum down the road.

In case it is not already obvious, I am not a computer wizard. I don't know much about the technical details of AMD's processors. I do, however, understand that Wall Street has a tendecy to be rather short-sighted about things, and if you are patient enough to have a long-term outlook (think hundreds of weeks rather than hundreds of days), you really can find steeply mispriced stocks and profit tremendously from that patience.

This pick will likely sit in my "loser" column for months, and I am okay with that. One day, maybe as soon as 2007 or 2008, I will be delighted by a nice, fat profit.

That's how it goes in my head, anyway. Time will tell...

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