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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (85424)	8/4/2020 8:35:27 PM
From: Sun Tzu	1 Recommendation Recommended By Return to Sender Respond to of 95487

With cyclicals (really with most stocks that are not in hyper-growth stage), PE10 is the best way to measure them. Figure out the average EPS for the last 10 years. Divide by the average price in the last 10 years. Divide by the average 10-year TBill rate (or even better, the 10-year AAA bond yield). Compare this number with the earnings' yield based on the last 2Q+estimate of the next 2Q - divided by the current 10yr TBill/Bond yield. How does it compare? Good? then buy the stock and don't look at it for another few years. Bad? Then trade the momentum and buy/sell options.

To: The Ox who wrote (85424)	8/4/2020 10:32:36 PM
From: Clear Eyed	1 Recommendation Recommended By Return to Sender Read Replies (1) \| Respond to of 95487

I’m going to take your query at face value and assume you aren’t short. But if you are short you may want to cover. A few points flushing this out: 1. Back in fiscal 2018 there was a major tax adjustment because of new trump administration led tax legislation that resulted in an increase in non-gaap earnings of over 20%. 2. Lam’s Installed base business is 40% greater than it was back then. 3. Lam has given 2023/2024 non-gaap eps guidance that’s in the mid $30s per share. And if you follow lam’s logic, that may prove conservative. 4. We are coming out of two years of muted memory wfe spend and it is about to inflect meaningfully higher for a number of quarters. 5. Lam’s share count is meaningfully lower than it was in 2018 which should provide significant eps leverage. 6. Lam has and continues to make significant inroads in foundry and logic. 7. Street estimates have been and are likely to continue to be (for the medium term) materially below likely results. Lam is a classic sandbagger and its product roadmap and best in class vertical scaling tools (as well as arguably best in class installed base biz and significant ability to drive accelerated financial results through accretive share repurchase) position lam very well for the medium term. What the market isn’t looking back to is 2018. The market is looking out to 2021. And if the market starts buying into lam’s calendar 2023 outlook, the stock looks very cheap.