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Here's Why You Should Bet on Lam Research (LRCX) Stock

Zacks Equity Research
Updated

Lam Research Corporation LRCX is currently one of the top-performing stocks in the technology sector and a rise in share price and strong fundamentals signal its bullish run. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

The company has performed extremely well so far this year and has the potential to carry on the momentum in the near term.

Why an Attractive Pick?

Share Price Appreciation: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourses year to date. Lam returned a whopping 96.6%, which compared favorably with the S&P 500’s gain of 14.8%.

Solid Rank & VGM Score: Lam sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or #2 (Buy) offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

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Northward Estimate Revisions: Seven estimates for the current year moved north over the past 30 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year increased 11.2%.

Positive Earnings Surprise History: Lam has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 5.3%.

Lam Research Corporation Price and EPS Surprise

Lam Research Corporation Price and EPS Surprise | Lam Research Corporation Quote

Strong Growth Prospects: The company’s Zacks Consensus Estimate for fiscal 2018 earnings of $14.45 reflects year-over-year growth of 44.8%. Moreover, earnings are expected to register 1.2% growth in fiscal 2019. The stock has long-term expected earnings per share growth rate of 14.9%.

Growth Drivers: Lam Research is doing well and continues succeed in areas such as device architecture, process flow and advanced packaging technology inflections.

The company has been improving on its WFE market share significantly since 2013 and expects to make strong gains by the end of calendar year 2017.

Management said that strong demand for bit growth in server DRAM and NAND will continue, driven by cloud computing and IoT, thus creating more opportunities for Lam Research in the near future. In fact, the company expects memory semiconductor segments to grow approximately 60% to about $130 billion in 2017 at strong levels of profitability.

Lam Research continues to see increased adoption rates of 3D NAND technology, FinFETs and multi-patterning. The company has undertaken cost-reduction activities and density scaling for 3D NAND and new memory technologies.

Moreover, the company anticipates continued strong demand for leading-edge silicon in the enterprise market courtesy of the long-term move to cloud, storage and networking applications.

Other Stocks to Consider

Other stocks worth considering in the broader technology sector include Activision Blizzard, ATVI, Applied Materials AMAT and Alibaba BABA, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings per share growth rate for Activision, Applied Materials and Alibaba is projected to be 13.8%, 17.1% and 30.7%, respectively.

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Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
 
Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
 
Lam Research Corporation (LRCX) : Free Stock Analysis Report
 
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
 
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Zacks Investment Research