Stockchase Opinions

The Panic-Proof Portfolio (Stockchase Research) KLA-Tencor KLAC-Q TOP PICK Aug 04, 2020

Stockchase Research Editor: Michael O'Reilly KLAC is a semi-conductor technology company, as in their wafer technology assists manufacturers in the most efficient production of chips. Semiconductors have enjoyed a surge in demand with the advent of cloud services, AI and upcoming 5G. KLCA also pays a decent yield that safe with a 50% payout ratio and the Board just approved the 11th consecutive dividend increase. The company has just raised its earnings guidance for the full year. Recently reported revenues were up 15%. We would use $185 as a stop loss with an objective towards $235 -- potential 15% upside. Yield 1.64%

$205.040

Stock price when the opinion was issued

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BUY
Geopolitical risk. Fantastic semi manufacturer. Leaders in a number of segments. Well positioned. Cyclical sector, so a huge amount of capex will come in, the industry will over expand, and then it will come to a dead stop. Backdrop over the next year is quite good.
BUY
Semis have been behaving well lately. This is cheap and offers tremendous margins.
BUY
He sold Intel but it sticking with KLAC for its healthy cash flow and lower capex.
BUY

A great way to play the AI chip gold rush. 30% free cash flow, 44% return on invested capital, double the industry average.

BUY

An overlooked semis name and trades at a reasonable PE. 

COMMENT

Equipment suppliers for semiconductor industry. Older school, cheaper than cutting-edge lithography companies. 12-month price target for LRCX of $1070, up 35% in last 100 days, great company, seems very competitive. Closest comparison would be to KLA.

BUY ON WEAKNESS

The semis space has done very well. However, if China builds capacity in this space, then capacity will be lost elsewhere. The market is not considering this. Also, shares of semis are at all-time highs. Don't buy. It's a recipe for disaster. Semis are a great space, but wait for a better entry point.

PARTIAL SELL

He prefers LRCX and ASML. He'd take profit on half and use proceeds to buy into ASML, as it's really rolled over because of weaker guidance.

BUY
Semiconductor opportunities.

Great opportunity to pick up 4 pillars. MU on the manufacturing, TSM for the foundry, LRCX or KLAC or ASML as the equipment suppliers, NVDA is a gift down here as a designer. And (he can't believe he's going to say this) even INTC; come 2025, it will be competitive with NVDA.

BUY ON WEAKNESS

Will benefit from non-leading edge technology for China; demand for semi equipment will continue. He prefers ASMl