LAM RESEARCH CORP (NASDAQ:LRCX) – A Strong Candidate for Quality Investors

LAM RESEARCH CORP (NASDAQ:LRCX) stands out as a compelling pick for quality investors, based on our Caviar Cruise screening methodology. The company demonstrates strong financial health, consistent growth, and high profitability—key traits sought by long-term investors.

Key Strengths of LRCX

• Revenue and Profit Growth: Over the past five years, LRCX has delivered a revenue CAGR of 10.27% and an EBIT CAGR of 11.88%, indicating steady expansion and improving operational efficiency.
• High Return on Invested Capital (ROIC): With an ROIC (excluding cash and goodwill) of 64.40%, the company efficiently generates profits from its capital investments, outperforming most peers.
• Strong Profit Quality: LRCX converts 87.72% of net income into free cash flow, reflecting reliable earnings and effective cash management.
• Low Debt Burden: The company’s debt-to-free cash flow ratio of 1.18 suggests it could repay its debt quickly, signaling financial stability.

Fundamental Analysis Summary

Our fundamental report assigns LRCX a score of 7 out of 10, highlighting:

• Profitability: Exceptional margins (ROE of 48.98%, operating margin of 30.88%) place it in the top tier of its industry.
• Financial Health: A solid Altman-Z score of 10.91 and manageable debt levels reinforce its resilience.
• Valuation: While not cheap, LRCX trades at reasonable multiples relative to growth expectations (forward P/E of 22.47).

For investors seeking high-quality semiconductor stocks, LRCX presents a well-balanced mix of growth, profitability, and financial strength.

Our Caviar Cruise screener lists more quality stocks updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.