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published in Blogs
Aug 12, 2019

Short-term trend line helping guide Lam Research higher

Since the low at the beginning of June, semiconductor manufacturer Lam Research (Nasdaq: LRCX) has been trending higher and a trend line connects the stock's lows over the last two months. The stock hit the trend line earlier this week and has bounced since then.

We see that the trend line connects the lows from June 17, June 25, and July 8. The series of higher lows has helped the stock move up 16% since the beginning of June and that is considerably better than the 6.76% gain by the S&P 500.

We see that the daily stochastic readings reached an oversold level earlier this week and have since made a bullish crossover. We saw a similar move by the indicators back in March before the stock went on a rally that saw the stock gain 25% in less than two months.

Another potential bullish factor for the stock is the fact that the 50-day moving average is in the same vicinity of the trend line and that could provide a secondary layer of support for the stock.

From a fundamental perspective, Lam Research has performed extremely well in the last few years, but struggled in the most recent quarterly report. The company had managed to grow earnings at a rate of 45% per year over the last three years, but second quarter earnings declined by 32% on a year over year basis.

The revenue numbers tell a similar story with the annual growth rate for the last three years coming in at 25%, but in the second quarter revenues were down 24% from the second quarter of 2018.

Lam Research has some really strong management efficiency ratings with a return on equity of 41.6% and a profit margin of 30.4%.

The Tickeron SMR rating for this company is 37, indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Valuation Rating of 20 indicates that the company is slightly undervalued in the industry. A rating of 1 point to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. 

Turning our attention to the sentiment indicators for Lam Research we see that there are 22 analysts following the stock. Of those 22 analysts, only 12 rate the stock as a “buy” while the other 10 rate the stock as a “hold”. This gives an overall buy percentage of 54.5% and that is well below average.

The short interest ratio is currently at 4.99 and that is slightly higher than the average stock and is indicative of slightly bearish sentiment. There are 8.2 million shares sold short at this time and that is up from 6.2 million in mid-May. At the same time that the number of shares sold short was on the rise, the average daily trading volume was falling from 1.75 million to 1.65 million.

With Lam Research having pretty solid fundamental ratings and seeing the upward trend in the stock, it is somewhat surprising to see the bearish sentiment toward the stock. From a contrarian perspective this could be good for the stock as it can help push the stock higher in the coming weeks.

Related Ticker: LRCX

LRCX in -3.79% downward trend, declining for three consecutive days on April 15, 2024

Moving lower for three straight days is viewed as a bearish sign. Keep an eye on this stock for future declines. Considering data from situations where LRCX declined for three days, in of 275 cases, the price declined further within the following month. The odds of a continued downward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bearish Trend Analysis

The Momentum Indicator moved below the 0 level on April 12, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on LRCX as a result. In of 89 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .

Bullish Trend Analysis

The Stochastic Oscillator is in the oversold zone. Keep an eye out for a move up in the foreseeable future.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where LRCX advanced for three days, in of 319 cases, the price rose further within the following month. The odds of a continued upward trend are .

LRCX may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

The Aroon Indicator entered an Uptrend today. In of 297 cases where LRCX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 62, placing this stock better than average.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. LRCX’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: LRCX's P/B Ratio (15.649) is slightly higher than the industry average of (6.473). P/E Ratio (37.872) is within average values for comparable stocks, (120.628). Projected Growth (PEG Ratio) (2.793) is also within normal values, averaging (2.560). Dividend Yield (0.008) settles around the average of (0.021) among similar stocks. P/S Ratio (9.174) is also within normal values, averaging (34.564).

Notable companies

The most notable companies in this group are NVIDIA Corp (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Company Ltd (NYSE:TSM), Broadcom (NASDAQ:AVGO), Advanced Micro Devices (NASDAQ:AMD), QUALCOMM (NASDAQ:QCOM), Applied Materials (NASDAQ:AMAT), Intel Corp (NASDAQ:INTC), Texas Instruments (NASDAQ:TXN), Micron Technology (NASDAQ:MU), Lam Research Corp (NASDAQ:LRCX).

Industry description

The semiconductor industry manufacturers all chip-related products, including research and development. These chips are used in innumerable electronic devices, including computers, cell phones, smartphones, and GPSs. Intel Corporation, NVIDIA Corp., and Broadcomm are some of the prominent players in this industry. Semiconductor companies usually tend to do well during periods of healthy economic growth, thereby inducing further research and development in the industry – which in turn augurs well for productivity and growth in the economy. In the near future, demand for semiconductor products (and possibly innovation within the segment) should only expand further, with the proliferation of 5G, autonomous vehicles, IoT, and various AI-driven electronics set to herald a new, advanced chapter in the technology-driven world as we know it. With burgeoning prospects comes great competition. In 2015, SIA estimated that U.S. semiconductor industry ranks as the second most competitive U.S. industry out of 2882 U.S. industries designated manufacturers by the U.S. Census Bureau.

Market Cap

The average market capitalization across the Semiconductors Industry is 41.11B. The market cap for tickers in the group ranges from 13.43K to 2.19T. NVDA holds the highest valuation in this group at 2.19T. The lowest valued company is CYBL at 13.43K.

High and low price notable news

The average weekly price growth across all stocks in the Semiconductors Industry was -4%. For the same Industry, the average monthly price growth was -4%, and the average quarterly price growth was 47%. WISA experienced the highest price growth at 87%, while SPVNF experienced the biggest fall at -83%.

Volume

The average weekly volume growth across all stocks in the Semiconductors Industry was 56%. For the same stocks of the Industry, the average monthly volume growth was -4% and the average quarterly volume growth was 56%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 58
P/E Growth Rating: 47
Price Growth Rating: 80
SMR Rating: 69
Profit Risk Rating: 62
Seasonality Score: -13 (-100 ... +100)
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LRCXDaily Signal changed days agoGain/Loss if shorted
 
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A.I.Advisor
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A.I. Advisor
published General Information

General Information

a manufacturer of semiconductor processing equipment

Industry Semiconductors

Profile
Fundamentals
Details
Industry
Electronic Production Equipment
Address
4650 Cushing Parkway
Phone
+1 510 572-0200
Employees
17200
Web
https://www.lamresearch.com
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