Lam Research Corporation (NASDAQ:LRCX) saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Lam Research's outlook and valuation to see if the opportunity still exists.
See our latest analysis for Lam Research
Is Lam Research Still Cheap?
According to my valuation model, Lam Research seems to be fairly priced at around 10% below my intrinsic value, which means if you buy Lam Research today, you'd be paying a reasonable price for it. And if you believe that the stock is really worth $602.27, then there isn't much room for the share price grow beyond what it's currently trading. So, is there another chance to buy low in the future? Given that Lam Research's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Lam Research look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. However, with a relatively muted profit growth of 2.2% expected over the next couple of years, growth doesn't seem like a key driver for a buy decision for Lam Research, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in LRCX's future outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you've been keeping tabs on LRCX, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Lam Research at this point in time. For example - Lam Research has 1 warning sign we think you should be aware of.
If you are no longer interested in Lam Research, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.