OT: ASML

ASML is a fun stock to think about. At a P/E of 38 and a P/S of 11 it’s hard to see it as undervalued, and yet Morningstar estimates the stock’s fair value to be $800, versus today’s close of $521. The case for ASML is that ASML is the only company that makes fab machines for sub-10nm chips. ASML uses what they call extreme UV lithography. One machine is as big as a bus and sells for $340 million. Anyone here have an opinion on ASML, either the company or the stock?

ASML’s Main R&D center is in Wilton CT, where I used to live till last year. I know a guy who work there. He bought the stock himself at a price much higher than the current level. Their factory is so busy that he works almost every weekend. In my personal opinion, I see two potential issues: 1. Their quarterly revenue can be subject to some manipulation as they just need shift one product’s delivery date to have a big swing on earning, 2. They are already pretty stressed on their factory.
On the plus side, the local government just announced ASML is expanding and hiring more people.
https://www.ctinsider.com/business/article/Dutch-company-inv…

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Although they have a large order book, deliveries are slowed by supply chain issues. The stock is not behaving as you would expect.

Like Taiwan Semiconductor. Running flat out but not getting ahead.

Everyone knows semiconductors is a growth business as they go into more and more products.

But the business is also cyclical. One day they will have excess capacity–from all the building going on. Then margins will fall.

A funny growth stock where demand is high but constraints limit profits.

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A funny growth stock where demand is high but constraints limit profits.

Maybe they will have an easier time meeting demand if shipments to China get banned during some geopolitical argument in the next few years?

I can’t think of any non-Chinese company more important for China’s industrial policy aspirations.

Jim

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i think their last equipment is already not allowed to ship to China. A few years ago, a couple workers of ASML who tried to take an job from a Chinese company got charged