Prepare for a Volatile Ride Ahead in Lam Research Stock After 278% Gains

Lam Research (LRCX) demonstrates strong technical momentum with a 278% gain over the past year. LRCX is supported by robust fundamentals. Valuation is elevated and Morningstar notes that the stock is 46% overvalued. For new buyers, this means you should proceed with caution and tight stop losses. Analyst sentiment is generally positive, with most rating LRCX a “Strong Buy.”

Today’s Featured Stock

Valued at $400 billion, Lam Research (LRCX) is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. It has built a strong global presence with core competencies in areas like nanoscale applications enablement, chemistry, plasma and fluidics, advanced systems engineering, and a broad range of operational disciplines. 

Its customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such as non-volatile memory, dynamic random-access memory, and logic devices.

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What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals; superior current momentum in both strength and direction; and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. LRCX checks those boxes. The Trend Seeker issued a new “Buy” signal on April 9. Since then, the stock has gained 23.1%.

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Barchart Technical Indicators for Lam Research

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Lam Research scored an all-time high of $333.33 on May 27.

Lam has a Weighted Alpha of +292.62. LRCX has a 100% “Buy” opinion from Barchart. The stock has gained 278.42% over the past 52 weeks. Lam has its Trend Seeker “Buy” signal intact. The stock recently traded at $321.16 with a 50-day moving average of $261.90. LRCX has made 13 new highs and gained 26.53% over the past month. Relative Strength Index (RSI) is at 65.75. 1.81x 60-month beta. There’s a technical support level around $311.06.

Don’t Forget the Fundamentals

$400 billion market capitalization. 56.88x trailing price-earnings ratio. 0.33% dividend yield. Analysts project revenue to grow 25.73% this year and another 31.49% next year. Earnings are estimated to increase 37.08% this year and an additional 39.76% next year.

Analyst and Investor Sentiment on Lam Research

The Wall Street analysts followed by Barchart give the stock 22 “Strong Buy,” 4 “Moderate Buy,” and 7 “Hold” opinions with price targets between $247 and $385. Value Line ranks the stock “Highest” with price targets between $99 and $369. CFRA’s MarketScope rates the stock a “Buy.” Morningstar thinks the stock is 46% overvalued with a fair value of $220. 88,420 investors are following the stock on Seeking Alpha, which rates it a “Hold.” Short interest is 2.28% of the float with 3.05 days to cover the float.

The Bottom Line on Lam Research

The revenue and earnings projections are positive, but its valuation is getting a little bit high. If you own the stock already, you made a good choice and should ride the trend. If you are just getting into it, please keep your stop losses tight and prepare for a short ride.

Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.

On the date of publication, Jim Van Meerten did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

 

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