Trading Idea: ASML Holding (ASML-NL)

We had an Enter Long Strategic signal on March 11, 2019, triggered by our system on ASML, ASML-NL, the Netherland Semiconductor company.

Our system also triggered an Enter Long Tactical signal on October 27, 2021 that imply a likely bullish acceleration. ASML has a strong track record, with a Behavioral score of 10/10, therefore the signal could be considered as mainly strategic.

ASML is a € 314 Bn market cap, manufacturer of chip-making equipment. The Company is engaged in the development and production of semiconductor equipment systems, consisting of lithography systems. The Company's products include systems, and installed base products and services. The Company offers TWINSCAN systems, equipped with lithography system with a mercury lamp as light source, Krypton Fluoride, and Argon Fluoride light sources for 300 millimeter processing wafers for manufacturing environments for which imaging at a small resolution is required. TWINSCAN systems also include immersion lithography systems (TWINSCAN immersion systems). The Company also offers NXE systems, which are equipped with extreme ultraviolet (EUV) light source technology. The Company offers YieldStar, a wafer metrology system.

There are risks to near-term results, particularly rising yields that hurt growth stocks valuation and supply chain issues. More strategically, Lithography faces very strong demand over the coming years. The oncoming foundry/logic spending should boost the sector for years to come. Europe and the US seek technical independence in semiconductors as a consequence to decoupling from China. This is a very strong long term tailwind for ASML. The global CapEx cycle will directly translate into demand for ASML as the company holds a monopoly over EUV (100% market share) and a near-monopoly over DUV immersion (88% market share).

For 2021 ASML is expected to post a €18.7 Bn revenue coupled with a € 5.56 Bn net profit. EPS growth is expected to reach 22% in 2022 and 15% in 2023.

Short term catalyst : Strong demand.

This signal looks consistent with the European Semiconductors sector in major bullish trend. There is a currently 71% of european semiconductors stocks in tactical signal and 79% in strategic signal.