Earn 11% Today or Buy LRCX 40% Cheaper – It’s a Win-Win

At about $220.4 a share, Lam Research (LRCX) is trading near its 52W high.

Do you think LRCX stock is a good long-term bet at current levels? What about at a 40% discount at about $130 per share? If you think that is a steal, and have some cash ready to go, here is a trade.

11% annualized yield at 40% margin of safety, by selling Put Options.

• Sell a long-dated Put option expiring 1/15/2027, with a strike price of $130
• Collect roughly $950 in premium per contract (each contract represents 100 shares)
• That’s about 7.2% annualized yield on the $13,000 you’re setting aside for the possibility of buying the stock
• This cash parked in a savings or money market account will earn an extra 4.0%, taking the total yield to 11.2%
• And you give yourself a chance to buy LRCX stock at a deeply discounted price of $130

However, this is not the only stock strategy in town. Trefis High Quality Portfolio is a sophisticated framework designed to reduce stock-specific risk while giving upside exposure.

Possible Trade Outcomes: You Win Either Way

But to hold this trade with conviction, you want to see long-term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.

First, you want fundamentals to check out. For details, see Buy or Sell LRCX Stock or check Lam Research Investment Highlights

Second, you want to better understand competitive advantage and industry tailwinds. Below is what specifically gives us the conviction.

Why Hold LRCX Stock Long-Term

Lam Research is a critical and dominant player in the semiconductor value chain, a sector with powerful secular tailwinds driven by AI, 5G, and IoT. Its wide moat, demonstrated by high switching costs and market leadership, ensures durable profitability. If assigned the stock, we would be owning an industry leader with a strong balance sheet that is essential for the production of nearly every advanced chip in the world.

Competitive Advantage

We classify LRCX’s economic moat as WIDE, with the primary source being Switching Costs

• Customers face prohibitive costs to switch from Lam’s installed tools, which are deeply integrated into their proprietary chipmaking process flows.
• Lam Research holds a dominant market share of approximately 45% in the critical etch market and is a strong number two in deposition, indicating a lack of viable alternatives for customers at scale.
• The company has consistently been ranked as one of Fortune’s World’s Most Admired Companies, suggesting strong customer trust and brand loyalty that reinforces its position.

See Lam Research Full Analysis.

Industry Tailwind

The industry tailwind is STRONG, with a CAGR projection of 9.2% (Source: Verified Market Research)

Secular Trend: Artificial Intelligence (AI) & High-Performance Computing
Key Risks: High customer concentration and the potential for increased US export controls targeting the semiconductor industry in China are the primary risks.

Financial Guardrails

Cash Generation: Positive Free Cash Flow
Balance Sheet: The company has a strong balance sheet with a negative net debt position (more cash than debt), indicating a very low risk of bankruptcy.

Not comfortable with options or stock-specific trades? PORTFOLIOS are even better.

A Multi Asset Portfolio Gives You Safer Smarter Growth

Stocks soar and sink, but bonds, commodities, and other assets balance the ride. A multi-asset portfolio keeps returns steadier and reduces single market risk.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices