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For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Lam Research (LRCX) ten years ago? It may not have been easy to hold on to LRCX for all that time, but if you did, how much would your investment be worth today?
Lam Research's Business In-Depth
With that in mind, let's take a look at Lam Research's main business drivers.
Established in 1980 and headquartered in Fremont, CA, Lam Research Corporation supplies wafer fabrication equipment and services to the semiconductor industry. Its products are used by semiconductor manufacturers in front-end and WLP processes, creating memory, microprocessors, and other logic integrated circuits for a broad range of electronic devices.
The MOS process of making integrated circuits involve the deposition of many layers of materials on a semiconductor wafer. Each layer is prepared using a pattern on a photomask, cleaning off the excess material and then exposing to light sources to change the chemical composition of the layer. The final wafer is then planarized, cut into individual die, electrical leads attached and packaged.
Lam's product offerings in deposition and etch address numerous critical steps in the fabrication process with the goal of reducing defect rates, improving yields, lowering costs and reducing the processing time.
In fiscal 2020, Lam served three market segments—Memory, Foundry and Logic/Integrated device manufacturing which generated 61% (down from 78% in 2019), 29% (up from 14% in 2019) and 10% (up from 8% in 2019), of its revenues, respectively.
The revenue distribution by geography in fiscal 2020 was as follows —Korea 32% (up from 14% in 2019), Taiwan 11% (down from 13% in 2019), Japan 8% (down from 17% in 2019), China 34% (up from 16% in 2019), U.S accounted for 7% (down from 7% in 2019), Europe 3% (down from 5% in 2019) and South East Asia accounted for 5% ( down from 7% in 2019).
Being a leading producer of specialized equipment, most of the competition comes from other large equipment makers, such as KLA-Tencor Corporation and Applied Materials, Inc.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Lam Research, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in April 2011 would be worth $13,092.08, or a 1,209.21% gain, as of April 22, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 212.06% and the price of gold went up 14.76% over the same time frame.
Looking ahead, analysts are expecting more upside for LRCX.
Lam Research is riding on broad-based secular growth across data transport, analysis and storage. Further, increasing NAND requirement in accelerating 5G migration, video, and new game consoles is driving the top-line growth of the company. Further, persistent Foundry strength remains a major positive. Also, advanced packaging technology inflections are other positives. Additionally, Lam Research has been benefiting from the transition to new data-enabled economy, wherein DRAM and NAND are continuously gaining from density growth. Also, both etch and deposition technologies are expected to expand the company’s addressable market. The stock has outperformed its industry over a year. However, uncertainty due to the coronavirus outbreak remains a concern. Further, the ongoing U.S.-China trade war and foreign currency fluctuations are overhangs.
The stock has jumped 12.60% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2021; the consensus estimate has moved up as well.
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