This ‘Strong Buy’ Tech Stock Has Double-Digit Growth in Revenue and Earnings

• Rambus (RMBS) has strong industry partnerships in data center and AI infrastructure.
• RMBS has gained 173% over the past year, trades above key moving averages, and maintains a 100% “Buy” technical opinion from Barchart.
• Shares set a new all-time high in Friday morning trading.
• While RMBS offers strong growth potential, it remains volatile and speculative; investors are advised to use strict risk management and stop-loss strategies.

Today’s Featured Stock

Valued at $11.5 billion, Rambus (RMBS) creates innovative hardware and software technologies, driving advancements from the data center to the mobile edge. 

Its chips, customizable IP cores, architecture licenses, tools, software, services, training and innovations improve the competitive advantage of its customers. 

More Top Stocks Daily: Go behind Wall Street’s hottest headlines with Barchart’s Active Investor newsletter.

 

Rambus’ products are integrated into tens of billions of devices and systems, powering and securing diverse applications, including Big Data, Internet of Things (IoT), mobile payments, and smart ticketing. 

What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals; superior current momentum in both strength and direction; and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. RMBS checks those boxes. Since the Trend Seeker signaled a buy on July 29, the stock gained 46.79%.

RMBS Price vs. Daily Moving Averages:

www.barchart.com

Barchart Technical Indicators for Rambus

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Rambus hit a new all-time high of $107.67 in morning trading on Sept. 19.

• Rambus has a Weighted Alpha of +190.31.
• RMBS has an 100% “Buy” opinion from Barchart.
• The stock gained 173.13% over the past year.
• RMBS has its Trend Seeker “Buy” signal intact.
• Rambus is trading above its 20-, 50-, and 100-day moving averages.
• The stock made 10 new highs and gained 53.59% in the last month.
• Relative Strength Index (RSI) is at 78.15%.
• There’s a technical support level around $102.23.

Don’t Forget the Fundamentals

• $11.5 billion market capitalization.
• 50.53x trailing price-earnings ratio.
• Revenue is expected to grow 19.29% this year and another 14.48% next year.
• Earnings are projected to increase by 22.97% this year and an additional 18.81% next year.

Analyst and Investor Sentiment on Rambus

I don’t buy stocks because everyone else is buying, but I do realize that if major firms and investors are dumping stock, it’s hard to make money swimming against the tide.

It looks like Wall Street analysts are high on Rambus.

• The Wall Street analysts tracked by Barchart have issued 8 “Strong Buys” and 2 “Hold” opinions on the stock.
• Their price targets are between $73-$130.
• Value Line gives the stock its “Above Average” rating with a price target between $55-$151 and comments: “The company is positioned to see top-line growth of 25% this year on the back of its DDR5 product line. This memory technology is broadly recognized for incorporation into critical data center and artificial intelligence (AI) infrastructure.”
• CFRA’s MarketScope Advisor rates it a “Hold.”
• Morningstar thinks the stock is 20% overvalued.
• 1,008 investors following the stock on Motley Fool think the stock will beat the market while 350 think it won’t.
• 12,530 investors monitor the stock on Seeking Alpha, which rates the stock a “Buy” and comments: “Rambus has successfully transitioned into a capital-light, fabless semiconductor and IP company, allowing it to benefit from growth in AI, memory, and data center markets, supported by a strong cash flow and minimal debt."

The Bottom Line on Rambus

RMBS seems to have it all – double digit projections of growth in both revenue and earnings and a wide following by individual and institutional investors.

I caution that RMBS is volatile and even speculative in the current environment, which means investors should use strict risk management and stop-loss strategies.

Today’s Chart of the Day was written by Jim Van Meerten. Read previous editions of the daily newsletter here.

Additional disclosure: The Barchart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.