Analysis: AMD LMT TSM

After you receive this Alert, we will make the following trades:

-- Sell 150 shares of Advanced Micro Devices (AMD) at or near $65. Following the trade, AMD will represent roughly 2% of the portfolio.

-- Buy 85 shares of Lockheed Martin (LMT) at or near $393. Following this initial trade for the portfolio, LMT will account for about 1% of the portfolio.

Trimming AMD

We continue to like AMD's business, however, our concerns over the weakness in the PC and gaming markets, industry inventory issues and reports that Taiwan Semiconductor (TSM) is seeing order cancellations for 2023 are leading us to use the recent strength in the shares to reduce the portfolio's exposure.

From a technical perspective, we see resistance at $75 but we'd note that it is coming down as well. Should we see AMD shares rebound near that level without a pronounced turn in the outlook for its end markets, we will likely trim back our AMD exposure even further.

Starting a New Position in LMT

We will use that returned capital and a portion of the portfolio's cash to begin a starter position in defense company Lockheed Martin (LMT) with a $450 price target and a Two investment rating.

Lockheed Martin is one of the premier names in the defense space. It is widely considered the largest defense company and is also one that has increased its dividend consistently over the last 19 years. With the company having recently paid its fourth quarter dividend of $2.80, we have entered at the time of year when Lockheed has typically announced its next dividend increase.

We'll have both a more in-depth note explaining our thesis behind LMT and a technical look at the stock today.