$KLAC, $LRCX & $NVDA: High Demand, Limited Competition

Long_Equity
05-09

An important screen for finding quality companies lies at the intersection of (I) high global demand for a product, and (II) only a small number of providers serving the market.

The semiconductor equipment companies are a great example. There’s huge global demand for compute, which requires semis, which requires the equipment that manufactures them.

That’s why I’m long $KLA-Tencor(KLAC)$ $Lam Research(LRCX)$ $NVIDIA(NVDA)$

There’s also huge demand for payments, and $Visa(V)$ and $MasterCard(MA)$ are two of the most important providers of payment services.

When high demand and a small number of providers company together, there’s normally strong revenue growth and most importantly, pricing power.

What stands out to you at this intersection?

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