LRCX is the semiconductor play for 2021-2022
tl;dr: LRCX will benefit tremendously from the US push to produce semiconductors. Buy shares and LEAPS.
Position: 103x LRCX shares with DRIP (dividend reinvestment) and 1x 1/2023 $500c.
- The push within the US to produce semiconductors (microchips) inside American borders has encouraged companies like INTC, TSMC, and Samsung to commit to building multi-million dollar fab plants (semiconductor factories).
- The semiconductor shortage in general indicates there is demand for more semis.
- The 5G and IoT rollouts means semiconductor demand will remain high and manufactories are likely to expand further.
LRCX is well-positioned to make money off this. LRCX builds the machines and does the research that these other companies need to make microchips. Without LRCX, there are no manufactories. And after the fab plants are built, the machines need maintenance. LRCX provides this maintenance at 30%+ margins.
LRCX has beat earnings 4/4 of the last quarters. It has the growth potential to continue beating earnings.
At a 27 P/E ratio, its valuation is average in its industry and has room to climb.
LRCX goes up and to the right. It has the fundamental backing to continue. Demand for shares increases as the stock gets down to $600.
MACD looks like shit, but RSI is positive and LRCX travels along its 50-DMA pretty well. Look to start DCAing into shares around this level and buy more shares or LEAPS as we approach $600.
AMAT competes with LRCX in most industry segments. However LRCX stands out as the best wafer developer. If you cannot afford LRCX at $600, AMAT is $136. AMAT is also more diversified and is a good alternative choice.
There are some others including a Dutch company, but AMAT and LRCX are the main competitors in this industry, and they both have a wide moat.
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June 11, 2021 at 02:17PM