ASML HOLDING NV (NASDAQ:ASML) stands out as a compelling pick for investors seeking long-term growth at a reasonable price (GARP). The company, a leader in semiconductor equipment systems, meets key criteria from Peter Lynch’s investment strategy, combining steady growth, strong profitability, and a sound financial position.
Why ASML Fits the GARP Approach
- Sustainable Growth: ASML’s earnings per share (EPS) have grown at an average annual rate of 25.6% over the past five years, comfortably within Lynch’s preferred range of 15-30%. This indicates strong but manageable expansion.
- Attractive Valuation: The stock’s PEG ratio (5-year) of 0.99 suggests it is reasonably priced relative to its growth, aligning with Lynch’s preference for PEG ratios below 1.
- Strong Profitability: With a return on equity (ROE) of 43.8%, ASML demonstrates exceptional efficiency in generating profits from shareholder investments.
- Healthy Balance Sheet: A debt-to-equity ratio of 0.17 reflects minimal reliance on borrowing, well below Lynch’s recommended threshold of 0.6. The current ratio of 1.41 also indicates sufficient liquidity to cover short-term obligations.
Fundamental Strengths
ASML’s fundamental analysis report highlights its robust financial health, including high margins, consistent cash flow, and industry-leading returns on capital. The company’s growth prospects remain solid, with analysts forecasting continued earnings and revenue increases.
Final Thoughts
For investors focused on durable growth without overpaying, ASML presents a well-balanced opportunity. Its leadership in semiconductor lithography, combined with disciplined financial management, makes it a standout in the tech sector.
Our Peter Lynch Strategy screener provides more stocks that fit this proven investment approach.
Disclaimer
This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own research before making investment decisions.
