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magazineLam Research continues upbeat second quarter tech run
LAM RESEARCH (LRCX) $375.76
Gain to date: 20.3%
Original entry point: Buy at $312.30, 25 June 2020
Microchips equipment designer Lam Research continued the impressive second quarter reporting run of major tech stocks, sending our Great Idea stock to a 20%-plus paper profit in barely two months. That’s twice the return of the supercharged Nasdaq’s 10% gain since 25 June.
As a reminder, the Silicon Valley-based business designs specialist equipment that helps semiconductor manufacturers improve yields, lower costs, shrink processing time and reduce defects on microchips. Customers include Intel, Toshiba, Samsung and Micron Technology.
After a similarly upbeat second three months to 30 June for microchip kit peers ASML and Texas Instruments, Lam posted quarterly earnings per share (EPS) of $4.01 that outstripped consensus expectations of $3.81 and topped last year’s second quarter EPS of $3.87. So much for Covid!
All of the same health warnings remain at this stage for Lam, such as customer concentration, competition etc, as do the original virtues, like its long-term client relationships, reputation for operational excellence and a rating that remains inexpensive compared to the wider market even after such a strong run.
SHARES SAYS: A solid start from an excellent business. Still a buy for the longer term.
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