March 7, 2024
Top 10 Stock Lam Research Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Lam Research – Top 10 Stock in SDG 3: Good Health and Well-being
Lam Research is listed as a top 10 stock on March 07, 2024 in the market index SDG 3 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 76 (top 76% performer), Obermatt assesses an overall strong buy recommendation for Lam Research on March 07, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Semiconductor Equipment |
| Index | Dividends USA, Employee Focus US, Diversity USA, Human Rights, Recycling, SDG 10, SDG 13, SDG 3, SDG 4, SDG 8, NASDAQ 100, NASDAQ, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Lam Research Strong Buy
| 360 METRICS | March 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 66 |
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| GROWTH | ||||||||
| GROWTH | 94 |
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| SAFETY | ||||||||
| SAFETY | 25 |
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| SENTIMENT | ||||||||
| SENTIMENT | 63 |
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| 360° VIEW | ||||||||
| 360° VIEW | 76 |
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ANALYSIS: With an Obermatt 360° View of 76 (better than 76% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Lam Research are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Lam Research. The consolidated Value Rank has an attractive rank of 66, which means that the share price of Lam Research is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 66% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 94, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 63. But the company’s financing is risky with a Safety rank of 25. This means 75% of comparable companies have a safer financing structure than Lam Research. ...read more
RECOMMENDATION: With a consolidated 360° View of 76, Lam Research is better positioned than 76% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 66), above-average growth (Growth Rank of 94), and positive market sentiment in the professional investor community (Sentiment Rank of 63), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 25), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of Lam Research is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Lam Research positive
ANALYSIS: With an Obermatt Sentiment Rank of 63 (better than 63% compared with alternatives), overall professional sentiment and engagement for the stock Lam Research is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Lam Research. Analyst Opinions are at a rank of 34 (worse than 66% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 49, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 63, which means that professional investors hold more stock in this company than in 63% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 72, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 72% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Lam Research and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 63 (more positive than 63% compared with investment alternatives), Lam Research has a reputation among professional investors that is above-average compared with that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Lam Research Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 66 (better than 66% compared with alternatives), Lam Research shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Lam Research. Price-to-Profit (also referred to as price-earnings, P/E) is 59 which means that the stock price compared with what market professionals expect for future profits is lower than for 59% of comparable companies, indicating a good value concerning Lam Research's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 3, which means that the stock price is lower as regards to invested capital than for 3% of comparable investments. On the other hand, Price-to-Sales is less favorable than 69% of alternatives (only 31% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 15% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 66, is a buy recommendation based on Lam Research's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Lam Research Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 94 (better than 94% compared with alternatives) for 2024, Lam Research shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Lam Research. Sales Growth has a rank of 56 which means that currently, professionals expect the company to grow more than 56% of its competitors. Capital Growth is also above 38% of competitors with a rank of 87, and Stock Returns with the rank of 93 is also an outperformance. Only Profit Growth is low with a rank of 38 which means that currently, professionals expect the company to grow its profits less than 62% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 94, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, Lam Research is a good growth stock. ...read more
Safety Strategy: Lam Research Debt Financing Safety below-average
| SAFETY METRICS | March 7, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 23 |
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| REFINANCING | ||||||||
| REFINANCING | 18 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 76 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 25 |
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ANALYSIS: With an Obermatt Safety Rank of 25 (better than 25% compared with alternatives), the company Lam Research has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Lam Research is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Lam Research. Liquidity is at 76, meaning the company generates more profit to service its debt than 76% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 18, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 82% of its competitors. Leverage is also high at a rank of 23, which means that the company has an above-average debt-to-equity ratio. It has more debt than 77% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 25 (worse than 75% compared with alternatives), Lam Research has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Lam Research Above-Average Financial Performance
| COMBINED PERFORMANCE | March 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 66 |
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| GROWTH | ||||||||
| GROWTH | 94 |
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| SAFETY | ||||||||
| SAFETY | 76 |
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| COMBINED | ||||||||
| COMBINED | 73 |
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ANALYSIS: With an Obermatt Combined Rank of 73 (better than 73% compared with investment alternatives), Lam Research (Semiconductor Equipment, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Lam Research are a good value (attractively priced) with a consolidated Value Rank of 66 (better than 66% of alternatives), show above-average growth (Growth Rank of 94) but are riskily financed (Safety Rank of 25), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 73, is a buy recommendation based on Lam Research's financial characteristics. As the company Lam Research's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 66) and above-average growth (Obermatt Growth Rank of 94), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 25) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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