RECOMMENDED: Stock to buy for medium to long term

INVESTMENT GUIDE STOCK ANALYSIS

This is a follow up on the the stocks to watch RSS feed on the app Investment Guide  you can also see the Particular post here posted on January 17, 2018. We will be looking at Lam Research Corp  stock.


The following is a description of the Company.

Lam Research Corporation is a supplier of wafer fabrication equipment and services to the semiconductor industry. The Company designs, manufactures, markets, refurbishes and services semiconductor processing systems that are used in the fabrication of integrated circuits (ICs). It operates through manufacturing and servicing of wafer processing semiconductor manufacturing equipment segment. 

The company has raking in significant revenue which obviously  

Chart of Lam Research Corporation: image source: Investing.com

The recent surge strongly suggest an upward momentum that will strongly favour BUY TRADES in the medium to long term. If you are familiar with RSI you may want to be careful around buying at  a stock at a value which is over 70 and that is the case now. However since we are considering the medium to long term return of the stock this may not be relevant. The dividend of this company also currently stands at $0.5 having been increased from $0.45 last year

The downside to buying the stock on the long term is the agreement to company recently announced a   $2 billion share repurchase authorization which if triggered will require owners of shares to sell their Shares back to the company. 

Other than the above points I feel the stock is a a good stock to buy given the potential to soar by 50-100 points this year.

Other data of Lam Research Corporation  (LRCX)  from investing.com

Why you must diversify your Investment portfolio across Geographical Region

All investments carries certain amount of risk whether it be (Forex, Stocks, ETFs, Mutual Funds, Crypto-currencies, commodities etc )as it relates to loosing ones capital, however few people are aware that investments also carry Geo-Political risks.  Other than balancing your portfolio based on volatility. 

Geo-Political Factors affecting your investments

The following are some of the ways the Geo-Political factor discussed can affect your investments

• Change in Government Policies: Economic downturns are often followed by change in government policies which tend to seriously hamper or promote your investments. A good example of this is the Tax Cuts introduced by Donald Trump in 2016 that would lead to increase the overall net profits and Dividends of all stock investments.
• Political uncertainty and instability: Political Upheavals like the recent crisis in Turkey seriously shook the stability of the region and also the investments that made the stocks to fall by over 2.5% on that day alone.
• Natural disasters are also known to affect investments: the routine earth quakes in the middle east, the hurricanes in the west can and do affect ones investments adversely. They could shutdown or damage a factory hence lead to significant losses.

As a result of the above factors, diversifying your  portfolio across Geo-Political Zones  offers the following benefits.

Benefits of Diversifying your Portfolio based on Geo Political Location

1. It will protect your investments from changes in the political instability: 
2. It will reduce your exposure to Geo-political zones such that the impact on your investments will be limited
3. It will give your investment a more global outlook which is generally safer than investing in just one country.
4. It allow you to stay abreast of all news across many geopolitical zones which in turn will allow you to be open to new opportunities as they arises

In our next post will address how to go about this.

Top things to consider before buying stocks

Picking the right stocks can be challenging for most new would be investors. Most people tend to choose a stock that has been recently trending or blue chip stocks (Stable expensive stock of very financially stable companies.)  As an investor stating in the market how should you go about it?

The following must be checked before buying a stock.

Check for financial stability usually marked by steady  or increasing profits: you will want the profits of the company you are investing in to be on an onward rise primarily because companies (especially those listed in the stock market) needs profit to grow or survive. As a result of this is is a must have criteria for investing in such companies. For high growth companies you must look for growth potential and not profits because at a tender age are likely to be making losses.

Check for companies that are innovative in nature: The competitive nature of the corporate world demands that companies must be innovative to stay in the competition. One must always shy away from companies that see themselves as "too big to fail" companies that treat their clients as shit and pay little or no attention to employee development or the likes are bound to fail. They must also be active in their Research and Development (also known as R & D).

Ensure that the price is not overbought/Overpriced:  There are some instances when companies having all the right stock metrics are overpriced (That is a lot of people have already bought the stock beyond its actual value) this was what happened to amazon and google that also crashed during the the 2000-2001 dot-com bubble bust. The companies were actually great innovative soon to be financially stable companies but where overpriced due to the hype that internet commerce was the next big thing. The earnings per share ratio helps with this. The earnings per share ratio must not be exceedingly.

In Summary

Having said the above, there are other things you  may want to check like the  interest coverage ratio which shows how the company will be capable of handling its interest expenses incurred from long term debt. However, the ones above are must have if your stock is to grow astronomically in the next 5-7 years.

RECOMMENDED RESOURCES

GOOD TO GREAT: This is an exceptional book read by many CEOs and would be investors about the essential qualities companies whose stock multiplied by 1000% and lasted for 50 years had. Do well to read them.

HONEY WELL STOCK- What you must consider before buying this stock

We have discussed why you should on an intel stock(Intel Corporation (INTC) ) on a short term here, we have analyzed Square which was also listed on how stock pick investment apps. (You can follow them via the RSS feed in our Investment Guide app. 

A typical bullish market was spotted  by the analysts at Investing however the following should be noted before making your decision to buy

• They have been no significant increase in the net income: Share prices are often the reflection of future dividend cash flow. The current growth rate of the stock has not been as impressive as the  rise in the stock price. 

Honey well stock chart(source Investing.com)

Honey Well  Profits in the last 3 years (source:Investing.com)

• The value of RSI(14) 68.329 close to the overbought range of 70 may not be a good sign do well to put this into consideration before buying the stock.

In summary

The price is bound to push up in the very short term but given the warning signs one may have to watch out for a short(sell trade in the coming months/year). Forcast of profits is promising though and guarantees a short term profit

Honey well stock  forecast (source Investing.com)

Should I buy an Intel Stock( January 2017)

Having discussed the prospect of investing in the stock market here. One of the recommended investment to invest in Intel Corporation (INTC) stock. 

Intel has been bullish of late especially after the third quarter in Oct 2017.

The fundamental indicators and technical indicators strongly suggests the price of the stock is going to reach the $50 mark. It's as of December 2017 its current yield stands at %2.36 hovering over an annualized amount of $1.

Call to action Buy 

Take Profit Target 50-55

Pros

• Intel has a good hold in the tech industry: Fortune magazine enlists them as the "world's second largest and second highest valued semiconductor chip makers based on revenue after being overtaken by Samsung".
• Their revenue has been on an increase off late
• They are a dividend paying stock
• Their financials look Ok medium term and have a good financial management team

Cons

• Their stock price has been quite stagnant over a long period of time
• There are other stocks that are likely to give better returns on a medium term.
• The is a tendency that the stock  may peak soon.