Buy. Buy. Buy.
Lam Research (LRCX) services and manufactures wafers for the semiconductor industry, and counts on revenue more from South Korea and Taiwan, than it does mainland China, but also gains more revenue from China than the United States. Just yesterday, Bank of America Merrill Lynch initiated the name with a Buy rating, and placed upon it a 305 price target. Cloud computing and artificial intelligence were named as drivers of growth in secular memory demand, and the stock was names a top pick by analyst Vivek Arya. This stock was my portfolio's best name in 2017, and remains one of my favorites.
Two weeks ago, the firm announced a more than doubling of the shareholder dividend, and a $2 billion boost to the share repurchase program.
One is immediately drawn to the rising trend line that provided support throughout most of 2017. The line, though now resistance, continues to rise. One is also drawn to the first line of support illustrated by the Fibonacci Fan model. That line, lost in the winter correction had been short-term resistance itself, before breaking, and now may be looked at as re-established support.
I would expect this morning to see Relative Strength and Money Flow ease from superior levels after the daily MACD suffers a bearish cross-over...probably on, or shortly after the opening bell in New York. Volume, mind you over the recent charge higher in share price, has been exceptional. What do I think?
This chart supports what the Bank of America analyst was thinking. I think 305 is aggressive, but 265 by summer certainly is realistic. Do I jump in right here? No. I need more of a discount to add to my long. However, I see prices anywhere between 205 and 215 prior to May 1. I likely add to this name trading at just 13 times next year's earnings. Lam Research reports earnings on April 25.