My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Now that semiconductor stocks seemed to be on the up swing again, why not put $Lam Research(LRCX)$ to the test & see if it fits the bill.
Sidetrack: I have covered (1) credit cards companies, (2) EV company, (3) entertainment company (4) technology companies and (5) financial institutions; to test out this theory.
- General Motors - Click here to read. Like the post ok. Tks.
- Visa Inc - Click here to read. Like the post ok. Tks.
- Tesla - Click here to read. Like the post ok. Tks.
- Netflix Inc - Click here to read. Like the post ok. Tks.
- MasterCard - Click here to read. Like the post ok. Tks.
- Intel - Click here to read. Like the post ok. Tks.
- Microsoft - Click here to read. Like the post ok. Tks.
- JP Morgan - Click here to read. .
- $Morgan Stanley(MS)$ - Click here to read.
- American supplier of wafer fabrication equipment and related services to the semiconductor industry.
- Founded in 1980; this is a 43 years young company
- In May 1984, it IPO-ed on Nasdaq
- As it area of business is very niche, competition is almost non-existent
- Its manufacturing plants are located across 5 countries - US, Austria, Korea, Taiwan and Malaysia
- Through strategic acquisitions, it was able to grow into its current $67.71 Billion market cap
- As of 2018, it was the 2nd largest manufacturer in the Bay Area, after Tesla.
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did Lam Research fare ?
Current stock price < 02 Feb 2022 stock price by -18.25%; resilient !
Lam Research ($LRCX) - Summary
- Revenue came in at $5.2 Billion vs $4.23 Billion (Q4 2021); thats a +22.93% gain (QoQ).
- Net income (GAAP) was $1.47 Million vs $1.19 Million (Q4 2021); thats a +23.53% gain (QoQ)
- Earnings per share (GAAP) was $10.77 vs $8.44 (Q4 2021); thats a +27.6% gain (QoQ)
- Minimal deviation for Non-GAAP earnings per share.
Lam Research - Revenue by products & Revenue by regions
- Bulk of revenue was contributed by memory chip of which non-volatile memory chips constituted 39% of the 50%.
- Next revenue generating product was the foundry businesses
- When it comes to country / region that contributes to the group's revenue, the top 3 countries are (a) China (24%), (b) Korea (20%) and (c) Taiwan (19%).
Lam Research - Other highlights
- Gross margin (non GAAP) was 45.1% vs 46.8% (Q4 2021); thats a marginal -1.7% decline (QoQ).
- Strangely enough, like other Mega cap companies, operating expenses have inflated in 2022 by +9% to $696.2 Million
- Lam Research pays a dividend of $6.90 per share.
Lam Research's CEO on Q4 2022 Results:
Given the decline in wafer fabrication equipment spending expected in calendar year 2023, we are taking proactive steps to lower our cost structure and drive efficiencies across our global footprint; while preserving critical R&D. With these actions, Lam is focused on accelerating our strategic priorities to capitalize on the semiconductor industry's long-term growth prospects... Lam Research, CEO, Timothy Archer....
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Why Is Lam Research - Both A Good Price and Good Company ?
- As mentioned earlier, LRCX makes the very complicated machinery used by foundries like Taiwan Semiconductor Manufacturing Co. (TSM) to make the silicon for chips made by the likes of Nvidia Corp. & Apple Inc.
- While the niche business means little to no competitor; in a cyclical industry like semiconductors - it could also mean dry seasons during demand-drought periods
- Despite reporting a stellar Q4 2022 earning results, LRCX is already in the process of cutting expenses and ramping up its Research & Development to bring about "new" demands
- Based on its current price, there is still a possible potential of +18% upside to its stock price.
- Looking at its 200-day, 50-day and 20-day Moving Averages; its a "happy" ending that its current stock price is a comfortable margin +9.83% from its 20-day MA.
- Do you think Lam Research is a "Buy" now before the semiconductor industry picks up momentum ?
- Do you think there is any upside to Lam Research in 2023 ?
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