CryptoCurrency
Could Lam Research Stock Help You Retire a Millionaire?
Semiconductors, or chips, are essentially the building blocks of modern technology. They are often made from silicon sliced into thin wafers and contain countless microscopic circuits. As you can imagine, manufacturing semiconductors is a highly complex process that requires state-of-the-art technology.
Lam Research (NASDAQ: LRCX) sells specialized equipment used in semiconductor production. The company’s history dates back to the 1980s, but thanks to the rise of artificial intelligence (AI), investors should be excited about its future potential.
The stock won’t make you rich overnight, but it can help you retire a millionaire as part of a diversified long-term portfolio. Here’s why:
The smaller the chips go, the bigger the investment opportunity
The investment pitch for Lam Research boils down to the company’s important role in the semiconductor space and where technology is trending.
Lam Research sells various products used in fabrication, the term used to describe the semiconductor manufacturing process. As fabrication technology improves, companies can fit more circuits on smaller chips. That’s why today’s smartphone can fit in the palm of your hand, yet it contains a computer that is exponentially more powerful than a desktop computer from 1990.
Modern electronics use increasingly complex chips and require more of them. That’s created decades of steady demand for Lam Research’s products, and that trend isn’t likely to end soon.
Various up-and-coming technologies will require highly complex semiconductors, including:
According to McKinsey & Company, companies worldwide could invest as much as $1 trillion in fabrication by 2030! It’s an ongoing push to put more circuits on smaller pieces of silicon. Ultimately, it makes technology possible that was only sci-fi a decade or two ago. I don’t know what the world will look like in 20 or 30 years, but Lam Research’s equipment will probably help build it.
Lam Research is a bonafide compounder
Lam Research is prone to boom-or-bust investment cycles within the semiconductor industry. You can see how that has impacted annual sales:
More important than the year-to-year ebb and flow is that the broader trend is up. I also like how Lam Research’s return on invested capital (ROIC) has gradually improved. It shows that the business effectively creates value with its financial resources and can indicate a competitive moat. I usually look for companies with a consistent 10% or better, and Lam Research easily clears that.
A consistently high return on capital snowballs over years or decades and can help drive earnings growth (and investment returns). The stock has returned over 37,938% since the mid-1980s, turning a modest $1,000 investment into over $379,380.
The price is right to buy today
The longer you hold a stock, the more a company’s growth and ROIC will dictate the stock’s returns. That’s why famed investor Warren Buffett prefers investing in great companies at fair prices over average companies at cheap prices. In other words, you don’t need to split hairs with great companies like Lam Research. As long as the price is reasonable, the stock should take care of you in the long run.
Lam Research has steadily retreated from its highs since July. China is a big customer for Lam Research, and geopolitical tensions have raised concerns about how they might impact business. Additionally, recent underwhelming guidance from industry peer ASML weighed on semiconductor equipment stocks. ASML warned of sluggish demand for non-AI chips.
Remember that the semiconductor industry has ups and downs and that as long as the industry grows over time, Lam Research should be just fine. The good news is that these concerns have brought the stock down to an attractive price for buyers. The stock trades at roughly 23 times 2024 earnings estimates, and analysts estimate the company will grow earnings by an average of 13% to 14% annually over the next three to five years. Shares aren’t a bargain at 24 times earnings for that anticipated growth, but plenty reasonable for long-term investors.
Lam Research is a blue-chip compounder poised to ride the innovation wave across AI and other technologies. I wouldn’t be surprised to see the stock continue to make investors very wealthy over the next two or three decades.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
-
Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,285!*
-
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,456!*
-
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $411,959!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 14, 2024
Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Lam Research. The Motley Fool has a disclosure policy.
Could Lam Research Stock Help You Retire a Millionaire? was originally published by The Motley Fool
CryptoCurrency
Nasdaq, S&P 500 sink as tech leads losses ahead of Tesla earnings
Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
CryptoCurrency
Tesla stock jumps on Q3 earnings beat
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
CryptoCurrency
Transak hit by data breach, 92K users exposed
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
CryptoCurrency
The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
CryptoCurrency
Zanzibar’s new blockchain sandbox aims to drive tech startup growth
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
CryptoCurrency
Price analysis 10/23: BTC, ETH, BNB, SOL, XRP, DOGE, TON, ADA, AVAX, SHIB
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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