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Lam Research: Undervalued Semiconductor Manufacturer

Apr. 08, 2021 7:10 PM ETLam Research Corporation (LRCX)AMAT, ASML17 Comments
Gleb Krivosheev profile picture
Gleb Krivosheev


  • Lam Research is one of the largest players in semiconductor industry. It manufactures various semiconductor equipment for customers from all over the world.
  • The company has shown outstanding financial performance compared to its peers past periods, and it is expected to continue. High profitability and growth rates might become key growth drivers.
  • At the same time, the relative valuation model shows a decent undervaluation. The company has upside potential and can be considered as a good investment.
Connector of Transient Photocurrent in Organic Semiconductor Measuring Machine
Photo by CasarsaGuru/E+ via Getty Images

Investment Thesis

The production of semiconductors has recently been under the close attention of investors. Lam Research (NASDAQ:LRCX) which is one of the companies in this industry, has already shown a very strong result for the first quarter of 2021 (not

This article was written by

Gleb Krivosheev profile picture
"Courage taught me no matter how bad a crisis gets ... any sound investment will eventually pay off." — Carlos Slim said. Even though this statement may be true (history shows that in most cases it is so), I am focusing on investments, that will pay off soon. Therefore, most of my articles are about companies that can unlock great potential in the near future.I started investing while I was studying at the university. Since then I was interested in stocks' fundamental analysis and valuation. Having 4 years of experience in the stock market, I decided to share my unbiased view on the market. My area of interest is global companies with decent growth potential and good financial health. Also, I cover some Russian companies, that I personally find good for both domestic and foreign investors. Feel free to contact me via email: gleb.krvshv@gmail.com

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (17)

Montresor profile picture
My cost basis on LRCX is $6.40 from a purchase in the mid 1996. In the last 25 years it has been a rollercoaster, as this is an extremely cyclical industry with an upside bias. Any buying here is pure speculation because this stock can easily drop 50-70% when the tide turns. Buy this when there is blood in the streets, not now in my opinion. I hope the author is right because I might sell a few shares if it can break above $700.
Buy the dips, sell the zips!
LCRX? Undervalued?? Remember owning this the first time in 1995. Back then, it was a KLAC, AMAT, BRKS, LCRX, TER and ASML argument. A lot just bet on one or two. The less gifted just bought a small amount of each.

But, today, re: LCRX. Is this author joking?? Or is he serious? At this latest up-cycle stage of the chip equip sector cycle, the argument cannot be rationally made that LCRX is "undervalued".

It's the opposite.

Well, any of you who have been long LCRX for years, just ignore the stock for another 2-3 years, as there's going to be some serious roller-coaster riding going on. In the long run, things should be fine. Just be patient and strong.

But for those of you initiating and/or considering initiating a LCRX position now, at today's prices? Please do dip in ever so lightly if you do, in case the proverbial roller-coaster equip-cycle ride gets a little rough of the next 18-32 months (like it usually does at this stage in the cycle).

The best of fortune to us all
JackKu profile picture
@D. Rider if you do not know how to spell the ticker, I guess you not know much about the stock. LRCX.
@D. Rider The cyclical nature of the past is now offset by the boom in the plethora of new places chips are being used - drones, robots, AI, IoT, EVs / Self-Drive cars, streaming, cloud boom etc.

I do have to acknowledge what you are highlighting.....I am in the midst of trying to decide whether to cleave the old thoughts out of my head regarding the top 6-7 semi equip makers. As you note, demand for all of what you mention is going nowhere but up, consistently. Sometimes hardest thing for me to do is make my mind forget everything that happened in the late 80s, 90s and 2000s. But I try to stay flexible. I just read through LRCX's last three filings, and the tone of cyclical possibilities isn't there anymore like it used to be in their old filings when i went through them. So.....this may be one more thing I do need to adapt (to the changes), begin thinking differently about, or risk not understanding them at all.

Thanks again, and all the best.
Thanks for your attempt to enlighten the SA readers but I find your analysis lacking insights and understanding of cyclical nature of chip sectors. It is very difficult for me to follow your logic based on TTM valuation, and futile attempt to group the suppliers together as some sort of commodities. GLTY.
I see the first drop to $355 as unstoppable. That's 41%. Thirteen percent up side versus forty one percent down side is not for me but good write up. PS: I won't be a be a buyer at $355 either!
This article prints after the stock is overbought and parabolic the past few weeks. It's advanced in a straight line almost $100. I might consider the stock below $600...Up here? No thanks.
papita profile picture
I have owned LRCX for quite some time. These semi equipment stocks trade like TSLA, very volatile. A 30 point move in 1day is not such a rarity.
I'd be careful at these levels. Lots of good news priced in and this business has been known, and still is, a very cyclical one. if your timing is off, you could sit for a year losing money. Stock has recently run from 500. 670ish has been resistance of late. careful here.
@papita Agreed. The run up on LRCX has been phenomenal.... Wish I had quadrupled down in March. Cost basis of $185 and I'm wondering if I should finally take profits.

Tech seems so inflated right now, but it just keeps rising. I've contemplated selling a few times and holding ended up working out. Wild ride...
agree. sales have been weighted toward memory market and reflect in the volatile sales numbers from 2018 to 2020. the stock price can go down months before memory price peaks.
@VictorN when do you predict that will happen?
nbsomerset profile picture
Interesting, undervalued until you get to the last paragraph...
@Gleb KrivosheevThanks for your article. Lam Research is an excellent company and I speak from personal experience! Long LRCX! :-)
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