Category Archives: LRCX

Lam Research 10-Year Targets

Posted on October 10, 2018 by | Leave a comment

Below are the valuation targets for Lam Research (LRCX) for the next 10 years. Continue reading →

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Lam Research: Fighting Gravity

Posted on August 12, 2018 by | Leave a comment

On September 27, 2017, we said the following of Lam Research (LRCX):

“Our view is that all parabolic moves are met with entropy.  This should bring a breakdown in the stock price to at least the conservative downside target of $90.43.  This isn’t a wish, it is based on the historical pattern in the price as previously indicated.”

Since September 2017, LRCX has increased from $177.12 to as high as $228.65, a change of +29%.  However, as of August 10, 2018, LRCX sits at $178.10, a change of +1% from the September 2017 posting.  Our belief is that the downside targets for LRCX are still in play based on the Speed Resistance Lines [SRL] that we propose.  Below is the updated SRL along with a Dow Theory consideration of upside targets.

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Lam Research: Downside Targets

Posted on September 27, 2017 by | Leave a comment

Review

The following is the pattern of price appreciation and decline for Lam Research (LRCX) from 1990 to 2017 with the application of Speed Resistance Lines [SRL].

1990 to 1998

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In the period from 1990 to 1995, Lam Research (LRCX) increased more than +3,470%.  From the peak of 1995, LRCX declined by –87.70% by 1998.  Based on the peak at $23.92, all of the Speed Resistance Lines [SRL] achieved their downside targets.

In addition, we’ve included the scenario for if the peak in the price were to have been the $13.13 level.  We included this because much of the analysis is based on parabolic moves to the upside.  Because we couldn’t possibly know where the peak in the price would be in real-time, we attempt to take the view, “what would happen if we were wrong about the peak?” Amazingly, even if we had chosen the $13.13 peak and used the downside targets based on the SRLs, we would have seen all of them achieved and would have been otherwise pleased if only the conservative target was met.

1998 to 2003

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In the above chart, from 1998 to 2000, LRCX increased +1,789%.  in the following decline, LRCX fell as much as –87.90%. 

There weren’t many “fake peaks” to initiate “what if” scenarios.  However, let’s assume that along the way up we had run the SRL and tried to project downside targets.  Any price above $14.00 would have generated a conservative downside target that the price action later achieved.  Also note that the period when LRCX rose from $2.94 to $12.79 and then fell to $9.04 would have generated a conservative downside target of $9.72.  This would have easily achieved the downside target.

2002 to 2008

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In the period from 2002 to 2007, LRCX increased +777.67% and later declined as much as –74.56%.

Not much can be said other than all downside target being achieved of the course of a six year period.  Again, in an attempt to prove our calculations wrong, we ran the $35.40 peak to see if the $19.80 number would have been an expected downside target. In the short term, the conservative downside target and mid range targets would have been accomplished.  In the long term, from the $35.40 level to the $15.00 in 2008, the low in 2008 would have met the SRL parameters for downside targets being achieved.

2008 to 2017

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Posted in entropy, Lam Research, LRCX, Nasdaq 100, parabolic, speed resistance line, SRL

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Nasdaq 100 Watch List: August 6, 2012

Posted on August 6, 2012 by | Leave a comment

Below are the Nasdaq 100 companies that are within 11% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol Name Price P/E EPS Price/Book % from low
EXPD Expeditors Int'l of Washington 36.04 20.83 1.73 3.66 3.47%
DELL Dell Inc. 11.8 6.74 1.75 2.2 3.60%
LRCX Lam Research Corporation 34.62 25.64 1.35 0.9 4.15%
CHRW CH Robinson Worldwide Inc. 53.63 19.72 2.72 6.79 5.55%
APOL Apollo Group Inc. 27.24 6.52 4.18 3.34 5.70%
INFY Infosys Ltd. 40.67 13.3 3.06 3.78 7.22%
NFLX Netflix, Inc. 56.79 32.3 1.76 4.35 7.54%
MRVL Marvell Technology Group Ltd. 11.12 11.91 0.93 1.3 8.28%
WYNN Wynn Resorts Ltd. 97.8 19.16 5.1 43.32 8.53%
CTRP Ctrip.com International Ltd. 13.47 14.93 0.9 1.7 8.98%
SPLS Staples, Inc. 13.08 9.39 1.39 1.26 9.55%
ATVI Activision Blizzard, Inc. 11.42 16.27 0.7 1.17 9.81%
RIMM Research In Motion Limited 7.26 - -0.1 0.38 10.67%

Watch List Summary

Standing out on our Nasdaq 100 Watch List is Lam Research (LRCX).  According the Yahoo!Finance, Lam Research is a company that “…designs, manufactures, markets, refurbishes, and services semiconductor processing equipments used in the fabrication of integrated circuits. The company offers etch products that remove portions of various films from the wafer in the creation of semiconductor devices.”

Starting with the fundamentals, Value Line Investment Survey indicates that LRCX has grow the book value from $5.20 in 2003 to the current level of $19.99 as of 2011.  Value Line suggests that LRCX has a fair value of 12x cash flow.  Based on the Value Line estimated cash flow of $2.60 for 2012, LRCX should be fairly valued at $31.20.  Value Line estimates that 2013 cash flow will be $4.55 resulting in a $54.60.  Additionally, shares outstanding have declined from 141 million shares to the estimated level of 119 million shares.

One issue that must be considered is the fact that in 2011, long-term debt skyrocketed 40 times the 2010 level.  This may have occurred at a time that borrowing costs are at their lowest point which ordinarily is a smart financial move.  However, we’d recommend considering the debt position as a potential negative before investing in LRCX.

Lam Research holds the largest market share of etchers (54% in 2011).  In our view their process technology is greater than its competitors, Applied Materials (AMAT) and Tokyo Electron.  Some of their top customers are Intel (INTC), Samsung, and TSMC (TSM).

According to Dow Theory, LRCX has the following downside targets:

  • $29.52
  • $24.59
  • $19.66
  • $14.73

Those interested in LRCX should consider buying the stock at $19.66 and below.

Watch List Performance Review

In our ongoing review of the Nasdaq 100 Watch List, we have taken the top five stocks on our list from August 12, 2011 and have checked their performance one year later. The top five companies on that list can be seen in the table below.

Symbol
 Name 8/12/2011 8/6/2012 % change
INFY Infosys Limited 53.78 40.67 -24.38%
ATVI Activision Blizzard, Inc 10.71 11.42 6.63%
LIFE Life Technologies 38.42 45.72 19.00%
NIHD NII Holdings, Inc. 36.9 8.08 -78.10%
AMGN Amgen Inc. 50 82.43 64.86%
-2.40%
NDX Nasdaq 100 2182.05 2694.09 23.47%

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The top five on our Watch List from last year were crushed when compared to the performance of the Nasdaq 100 Index.  Three stocks on our watch list (ATVI, LIFE, AMGN) were able to achieve 10% or greater within a one year timeframe.

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