The Low-Key MVP šŸ¤«

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For the 3rd December 2024:

  • The Low-Key MVP šŸ¤«

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The Low-Key MVP šŸ¤«

Iā€™m looking for the low-key MVPs of the tech world. Nothing flashy like Tesla or hyped-up like Nvidia. Something under the radar where thereā€™s value to be had.

Yesterday I had TSMC, today Iā€™ve gotā€¦. šŸ„ ā€¦ ASML!

My current holding in ASML isnā€™t looking great but greatness takes time & patience.

The Elevator Pitch šŸ›—

ASML is basically the only company making EUV lithography machines. Those machines help make the smartest chips going. Without ASML, thereā€™s no AI boom, no cutting-edge semiconductors, & definitely no fancy chips in your latest iPhone.

What a beautiful spot to find yourself in.

ASMLā€™s tech is a non-negotiable. AI data centers, cutting-edge semiconductors & all the latest gadgets need it. Itā€™s not a ā€œnice to haveā€. Itā€™s a ā€œmust haveā€.

This is the tech changing the world. Looks like itā€™s straight from a spaceship.

And that podium position showed up in the stock price. They killed it in 2022-23. Share price flew up 215% from $350 to $1,100. šŸš€

But have you heard that old, classic phrase? It goes a little something like ā€œwhat goes up, must come downā€.

ASML didnā€™t get an exemption pass.

ASML in the Discount Bin šŸ—‘ļø 

The stockā€™s now down 40% since July. Theyā€™ve had a few things working against them. Here they are to bring you up to speed:

Since July, ASML has fallen as much as 40%. Weā€™re currently 33% down from July highs.

1/ Overcooked: It shot up too fast & needed a breather. Very, very rarely do stocks just go parabolic. Healthy growth means you need to cool off every once in a while. You wouldnā€™t win a marathon if you sprinted from the finish line, right? šŸƒā€ā™‚ļø 

2/ China drama: Tariff talk spooked investors. Get ready for more of where this come from. Itā€™s Trumpā€™s new buzz word.

3/ Guidance woes: Sales forecast for 2025 dropped from ā€œgreatā€ to ā€œgoodā€. Cue the overreaction sell-off.

Since the end of October itā€™s found some legs around $605 & has been pretty range bound since then so we mightā€™ve found a bottom.

I liked ASML in the $800ā€™s so youā€™d be right to think I love it at $600. Thatā€™s exactly whyā€¦.

Iā€™m Buying the Dip šŸ‘€

ASML isnā€™t some one-hit wonder. Their fundamentals still slap. $8.13 billion in quarterly revenue, a strong position in the AI boom & a price-to-earnings ratio thatā€™s practically the best itā€™s ever been, Iā€™m really struggling to come up with a bear case.

ASMLā€™s P/E ratio over the last 5 years. Weā€™re in a great spot for a value buy

The global AI market is growing at 36% per year!. That growth cannot happen without the machines ASML are providing.

Projections have their earnings climbing from ~$26/share in 2025 to ~$32 in 2026.

Thatā€™s why most of wall street have ā€œ$900+ in 12 monthsā€ written next to ASML in their notebooks. Some have even come up with $1,100+ whichā€™d make it a 62% gain. šŸ¤Æ 

I fall more in the conservative camp & expect weā€™ll see somewhere around $930ish in the not so distant future.

A push to $930 still leaves me with a near 37% gain from current price

Risks? Of Course. šŸ‘»

I said Iā€™d struggle with a bear case & I think the biggest risks are the general market & thingā€™s weā€™ve already had a taste of.

Tariff trouble with China could slow things down a little. And if AI as a whole slows down then there wonā€™t be any need for ASMLā€™s fancy machinery.

I think these are very fringe worries. Theyā€™ve navigated through things like this before & their near-monopoly status on essential tech makes it tough to bet against them.

Invest & Save Lives At the Same Time! šŸ©ŗ

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