Invest in the Most Intellectual Expansion Stock Worth Investing $1,000 Immediately
Invest in the Most Intellectual Expansion Stock Worth Investing $1,000 Immediately
Certainly, you might have heard about the California Gold Rush of 1849. What you might not know, however, is that most individuals who set off west in search of gold didn't actually discover much of it, if any.
That's not to say there weren't fortunes made. Besides the small number of miners who struck it rich by finding gold, the people who sold mining tools to the prospectors, such as shovels and pickaxes, also did quite well for themselves.
The story has been told so many times that it has become almost a cliche. The point still stands though. This is that sometimes opportunity-seekers can become so focused on a particular opportunity that they overlook a related one that may be even more promising.
Enter Lam Research (LRCX -1.70%), which may just be the technology sector's top investment prospect at this time.
What does Lam Research do?
If you haven't heard of it, that's not surprising. The $100 billion company doesn't manufacture anything you directly use. Lam Research, however, makes the technological tools required to manufacture something you depend on every day. That's technology itself. As the company touts, "virtually every leading edge device has been made using our equipment."
Take something as commonplace as semiconductors as an example. There's a good chance the ones you're using right now were initially designed by Lam's Semiverse virtual engineering tech, with that silicon then also being cleaned and etched by this company's products.
Lam Research isn't resting on its laurels, only updating its existing capabilities. It's innovating as well. As an example, earlier this month it unveiled the semiconductor industry's first-ever collaborative robot (or cobot), called Dextro. Lam's Customer Support Business Group Vice President Chris Carter explained of this solution, "Built to work side-by-side with fab engineers, it executes complex maintenance tasks with precision and repeatability that are beyond human capability alone, enabling higher tool uptime and manufacturing yield."
You get the idea. Its solutions are nothing that you as a consumer or your employer would ever need, or even want. Lam Research's chipmaking customers, however, desperately need its hardware to make the technology products that you and your employer ultimately depend on.
The bullish argument(s) for Lam Research
Lam's clearly has value to the world's semiconductor fab industry, but is it actually the smartest growth stock to buy with $1,000 right now (or any other amount of money, for that matter)? After all, most tech companies are in the same proverbial boat, with their top and bottom lines all closely tethered to one another.
There's no denying Lam Research's fortunes generally ebb and flow with the broader technology sector. But perhaps not as much as you might think. Although it ran into a revenue headwind last year, that's largely compared to a surge of sales that had been put on hold during and because of the COVID-19 pandemic. The company's top line is already growing again, on pace to improve 16% this fiscal year before growing an expected 13% next year.
Ditto for the bottom line; it does rock back and forth. For every one step back it takes, though, it reliably takes two more steps forward. Lam's now reliably about 4 times as profitable as it was less than a decade ago when it acquired Coventor, which laid much of the groundwork for what would eventually become its Semiverse platform. In 2019, the organization introduced its Corvus etching and Coronus wafer-cleaning systems, offering foundries a means of improving their production yields of properly functioning silicon. Then in late 2020, Lam unveiled its advanced Striker FE platform, setting the stage for next-generation NAND and DRAM memory chips.
These aren't evolutions that you or most other consumers think much about. You simply use them, expecting your newer electronic devices to be better than your old ones. Lam Research is a big reason that's happening without you noticing. That's what its long-term sales and earnings growth suggest anyway, even if we do see the occasional short-lived swoon.
Buy Lam Research sooner rather than later
But right now? What's the hurry?
There's arguably no bad time to buy into a company you rely on. But there's arguably a better time to take a swing than others. In this case, that time is now, while Lam stock is still down 30% from July's high.
See, the midyear pullback is largely in response to second-quarter results that were good, but not good enough to keep the stock propped up at its then-newly buoyed price; sales only grew a modest 2.1% for the three-month stretch in question.
As the stock's budding rebound effort since last month's low implies, however, more and more investors are starting to believe this slowdown is just another temporary one that will ultimately cede back to double-digit growth. It certainly wouldn't be the first time Lam shares have bounced back from a dip, reflecting the company's reliable long-term growth record.
Despite the focus on finding gold during the California Gold Rush, many individuals who set off west didn't find much gold, but those who sold mining tools to the prospectors, such as shovels and pickaxes, benefited financially from the opportunity.
Investing in Lam Research (LRCX -1.70%) could be a promising opportunity in the technology sector, as it provides the technological tools required to manufacture products you depend on every day, from semiconductors to the latest electronic devices.