Buy LRCX Stock At $90?
CANADA - 2025/02/10: In this photo illustration, the Lam Research Corporation logo is seen displayed ... More on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
Lam Research (NASDAQ:LRCX) stock has experienced a notable increase this year, rising by 22% and significantly outperforming the S&P 500's modest gain of 2%. This remarkable performance can be attributed primarily to the company's solid quarterly results, fueled by strong foundry revenues and improving margins.
Given this recent surge, the crucial question for investors is whether LRCX is still a compelling purchase. We believe it is. Despite its current price hovering around $90, we see little reason for worry regarding LRCX stock, particularly in light of its reasonable valuation. Our conclusion stems from a thorough analysis of Lam Research's operational performance in recent years, along with its current and historical financial health. We have assessed the company based on several core metrics: Growth, Profitability, Financial Stability, and Downturn Resilience. Our results show that Lam Research demonstrates exceptionally strong operating performance and financial stability, positioning it as an attractive investment option. However, for those investors who prefer lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative — it has outperformed the S&P 500 and delivered returns exceeding 91% since its inception. Separately, see – What's Better – Circle Stock Or Bitcoin?
When considering what you pay per dollar of sales or profit, LRCX stock appears slightly overvalued in relation to the wider market.
Lam Research's Revenues have demonstrated significant growth over the past few years.
Lam Research's profit margins are significantly higher than those of most companies in the Trefis coverage universe.
Lam Research's balance sheet appears very robust.
LRCX stock has underperformed compared to the benchmark S&P 500 index during some recent downturns. Concerned about how a market crash could affect LRCX stock? Our dashboard How Low Can Lam Research Stock Go In A Market Crash? provides an in-depth analysis of how the stock has fared during and after previous market crashes.
In conclusion, Lam Research's performance across the discussed metrics is summarized as follows:
Overall, Lam Research has demonstrated excellent performance across the critical metrics we evaluated. We believe this strong operational and financial health is not entirely reflected in the current moderate valuation of the stock, making LRCX an appealing investment. This further reinforces our belief that Lam Research is a solid investment choice.
Although LRCX stock appears promising, investing in a single stock can entail risks. Conversely, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has consistently outperformed the S&P 500 over the past 4-year period. Why is that the case? As a group, HQ Portfolio stocks yielded better returns with lower risk in comparison to the benchmark index; providing a smoother ride, as shown in HQ Portfolio performance metrics.
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