Stock Split Fever: A Hidden Gem Awaits
The investing world is abuzz with stock splits, and for good reason. With over 450 forward stock splits this year, including reverse stock splits, investors are taking notice. Some stocks have seen remarkable gains, such as Microstrategy’s 420% surge and Nvidia’s 190% jump. But one stock-split stock has flown under the radar, despite its massive potential.
Lam Research: A Diamond in the Rough
Lam Research (NASDAQ: LRCX) conducted a 10-for-1 stock split in October, following a $10 billion stock buyback announcement in May. The move was meant to enable more employees to participate in the company’s employee stock plans, according to CFO Doug Bettinger. Initially, the stock soared, but it has since tumbled 36% from its peak. However, Wall Street remains bullish, with an average 12-month price target reflecting a 29% upside potential.
Growth Prospects Shine Bright
So, what’s driving the optimism? Lam Research’s growth prospects are undeniable. Despite a current slump in NAND flash memory spending, the company expects a rebound. CEO Timothy Archer predicts that technology updates will boost investments in NAND, and more customers will convert to advanced nodes in 2025. Additionally, Lam is poised to expand its market share in advanced extreme ultraviolet lithography patterning and advanced packaging.
Valuation Looks Attractive
The stock’s price-to-earnings-to-growth (PEG) ratio, based on five-year earnings growth projections, stands at 1.44, lower than its top rival Applied Materials’ 1.72 PEG multiple. This suggests that Lam Research’s valuation is reasonable, making it an attractive bet for long-term investors.
Risks and Opportunities
While Lam faces risks, such as volatility in the Chinese market and potential tariffs on U.S. imports, the demand for NAND flash memory is likely to bounce back. With its strong position in the industry, Lam is well-equipped to benefit from this trend.
A Solid Winner in the Making
Whether or not Lam Research hits Wall Street’s consensus price target, its long-term potential looks promising. With its growth prospects, attractive valuation, and industry leadership, this stock-split stock could crush the market over the next 12 months.
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