I've been thinking about this question for a few days. It's got one of, if not the strongest moat I've ever seen.
They build some of the most complex machines in existence. If you know the story of how the EUV machines came to be, I highly doubt that it would even be possible for that to happen today. I don't see a competitor coming along to disrupt them, although anything is possible.
They have a net cash position, so the balance sheet is fine.
As a company, ASML is a no-brainer - they'll be around in 10 or 20 years and likely bigger.
I don't think they're cheap enough to call them a no-brainer investment though. Looking at the trailing and forward PE, ASML is as cheap as it's been since 2020. However, at 35x earnings, there's still a lot of growth priced in. The FCF yield is only 1.2% for example.
That doesn't mean I think ASML would be a bad investment at this point, it's just not so obvious that it's a no-brainer, at least for me. Hope that helps!
Hi TJ. I really like your approach and mindset.
Do you have any views on ASML today. Do you consider it a no brainer ?
I've been thinking about this question for a few days. It's got one of, if not the strongest moat I've ever seen.
They build some of the most complex machines in existence. If you know the story of how the EUV machines came to be, I highly doubt that it would even be possible for that to happen today. I don't see a competitor coming along to disrupt them, although anything is possible.
They have a net cash position, so the balance sheet is fine.
As a company, ASML is a no-brainer - they'll be around in 10 or 20 years and likely bigger.
I don't think they're cheap enough to call them a no-brainer investment though. Looking at the trailing and forward PE, ASML is as cheap as it's been since 2020. However, at 35x earnings, there's still a lot of growth priced in. The FCF yield is only 1.2% for example.
That doesn't mean I think ASML would be a bad investment at this point, it's just not so obvious that it's a no-brainer, at least for me. Hope that helps!
Thanks TJ for sharing your insights. Very Helpful :)
Excellent article. I too have a newfound appreciation of shareholder yield. Now we hunt and lie in wait... easier said than done 😁
Thanks Kevin! The idea of having more than just changes in multiple as a driver of potential returns makes a lot sense to me.