Sell Alert: KLA-Tencor (KLAC)

TRADE INSTRUCTIONS

Date: January 24, 2018
Name: KLAC-Tencor
Symbol: KLAC (NasdaqGS)
Type: Close
Limit: Sell at market              

TRADE RATIONALE

On the day I extended this trade earlier this month, KLAC closed at $106.28. Since then, it has climbed back above my target price of $115, justifying my conviction that the semiconductor sector had become oversold.

KLAC is scheduled to release quarterly results after the market close this Thursday. Given its big run up over the past week, at this point I see more downside risk than upside potential in the stock so I’m closing out this position while I have a “bird in the hand” for a nifty 60%+ annualized gain.

However, if you decide to remain in this position to until Friday then I suggest you consider placing a stop order tightly beneath it in case the news is not good.

Stock Talk

MarkS

MarkS

Jim, based on your advice I stayed in KLAC, but placed OCO order with a stop loss at $113.75 and a sell at $118. This morning KLAC traded as high as $121 before dropping back under $115, so I got out at $118. A 21% gain in just over 4 months! thanks

Jim Pearce

Jim Pearce

Great trade Mark, looks like you got out at just the right time!

Janis Bell

Janis Bell

How do you keep both orders open Mark?
I’m on Schwab, and I can only keep open one or the other it seems. I would’ve done that with WDC which I was reluctant to sell since PF recommends it as a hold.

MarkS

MarkS

Janis, my account is with Fidelity. Fidelity allows you to make a stock ‘exit plan’ which is a “bracket order (OCO)”. The bracket order allows you to enter a (upper) limit order and a (lower) stop loss order. OCO is One Cancels the Other, so upon execution of one leg of the bracket order, the other leg is cancelled. You might ask Schwab about a bracket order or an OCO order. With Fidelity I can do it online; with Schwab you might have to call (at least the first time to find out if it can be done online).
Good trading,

Kwakwani

Kwakwani

Jim, I bought and sold KLAC as you recommended. Do you still think KLAC could be the target of an M&A this year?

Jim Pearce

Jim Pearce

Yes. Now that the corporate tax cut is a reality, I believe one of the big tech companies may use their tax savings to acquire KLAC later this year. At a share price of $120 it is still valued at only 14 times forward earnings, so even if an offer to buy it was made at a 25% premium that would still be a reasonable price to pay for it.

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