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3 Reasons to Sell Applied Materials Today

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Acting on panic never helps investors, but it's still a good idea to question why you're really buying individual investments.

Consider chip equipment supplier Applied Materials (Nasdaq: AMAT  ) . Though the semiconductor sector continues to show strength, you'll find a few of the 1,878 Motley Fool CAPS members who have weighed in on the company offering reasons to be bearish.

Here at The Motley Fool, we like to consider both the good and bad sides of an investment, so in this article I'm highlighting three of the main bearish arguments on Applied Materials today. But be sure to read the bullish side as well, and then weigh in with your own comments below or rate Applied Materials in CAPS.                                              

1. Slowing chip growth
Despite explosive semiconductor growth this year, signs are surfacing that the rapid growth in the chip sector won't hold up. Intel (Nasdaq: INTC  ) lowered its quarterly sales forecast on slower PC demand, while AMD (NYSE: AMD  ) is seeing softness as well, and had its earnings estimates slashed by more than one analyst. Research firm Gartner also expects global computer chip sales to slow to just 4.6% growth next year, causing investors and some analysts to remain cautious on Applied Materials' near-term growth prospects.           

2. Sliding solar
Along with Chinese solar players Trina Solar (NYSE: TSL  ) and Yingli Green Energy (NYSE: YGE  ) , Applied Materials reported strong solar revenues in its most recent quarter. But it's also had to shut its unprofitable thin-film solar line, and unlike competitor GT Solar's (Nasdaq: SOLR  ) increased full-year outlook, Applied Materials expects weakening solar sales in its fiscal fourth quarter due to shrinking European subsidies. Some investors are concerned about potential overcapacity, and the shifting government subsidies and mixed outlooks don't instill much confidence.

3. Sector underperformer
Some CAPS members, unsatisfied with Applied Materials' share performance, have abandoned the company in favor of better situated peers. The stock is far from its prerecession levels and has shed 18% of its value over the past year, compared with 20% 52-week gains by smaller peer Lam Research (Nasdaq: LRCX  ) . With the potential for more headwinds, some investors see better opportunities elsewhere.

To see details of what CAPS members are saying now about Applied Materials, just click on over to Motley Fool CAPS and have a look, or add your own thoughts directly to this story in the comments box below.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. 

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 65 points on average, take a free 30-day trial.

Fool contributor Dave Mock votes 3 the number of the day. He owns shares of Intel, which is an Inside Value recommendation. The Fool owns shares of and has written puts on Intel. Motley Fool Options has recommended buying calls on Intel. The Fool's disclosure policy was mocked when it forgot the correct sequence for the hokey pokey.

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