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Looking into well-capitalized companies with positive revenue growth, healthy margins, positive EPS growth, and "buy or better" expectations from the Street and I found $AMAT. Seems like a slam-dunk industry bet, and would love opinions.
Industry quick thoughts:
- Consumer demand drove electronics demand (e.g. OLED) for years but digital transformation and commercial investment into IoT edges and AI should spur growth. AMAT Semiconductor Systems segment revenue at all-time high in FY20, +33% y/y.
- Samsung, TSMC, Intel, Micron, make up >50% of sales; TSMC recently announced plans to commit half their projected 2021 revenue to capital spending (+40-50% y/y), 80% of which is expected to be used for advanced processor technology.
Company quick thoughts:
- AMAT has an excellent financial profile: ~0.5 debt/equity, 12% revenue CAGR L5Y, 28% EPS CAGR L5Y, ~20% profit margin
Given this I would think $AMAT is an excellent candidate for investment. In a similar vein, $LRCX should benefit from industry tailwinds as well, does not directly compete with AMAT in some subsets, and has healthy margins (but slightly worse debt/equity). I plan to read more and buy into a long position over the next few weeks but would love thoughts from others.
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