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The ASML Investment Thesis
ASML Holding N.V. (NASDAQ:ASML), one of the most important companies in the development of AI, had a tough last year in terms of its stock price. But the share price does not tell you how important
ASML: World-Class Yet Undervalued
Summary
- ASML is undervalued due to temporary market uncertainties, trading below its historical PE multiple, with strong future growth prospects driven by AI and robust competitive advantages.
- Q1 2025 results show higher year-over-year net sales and net income, indicating a strong business performance despite typical first-quarter weaknesses.
- ASML's competitive edge remains intact with high barriers to entry, superior technology, and increasing service revenue from durable machines.
- Despite macro and tariff risks, ASML's strong earnings, potential multiple expansion, and shareholder-friendly capital allocation make it an attractive 5-year investment.
My primary area of concentration will be on identifying companies of exceptional caliber, with a proven ability to reinvest capital for impressive returns. Targeting those with a market capitalization of less than $10 billion, affords ample opportunities for growth. The ideal scenario is for these companies to demonstrate a long-term capability of capital compounding, with a high enough compound annual growth rate to potentially deliver tenfold returns or even greater.My approach is to maintain a long-term perspective on these companies, as I believe this will generate higher returns compared to the market index, in a rapidly evolving investment landscape where short-term holdings are becoming increasingly prevalent.I primarily adopt a conservative investment strategy, but occasionally I may pursue opportunities with a favorable risk-reward ratio where the potential upside is substantial and downside is limited. These ventures are carefully considered and allocated a proportional amount within my portfolio to maintain overall stability.Bachelor's degree in finance and accounting All ideas and articles are provided for informational and educational purposes. Nothing contained herein is investment advice or should be construed as investment advice. All decisions that you make after reading our articles and reports are 100% your responsibility.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of ASML either through stock ownership, options, or other derivatives. 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.
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