 Hey everyone, this is Dan with another episode of my ASML video. ASML provides lithography equipment to semiconductor foundries and has the monopoly or near monopoly in a couple of very important markets. ASML reached the all-time high on September 14th, then it dropped 20% and started to recover on October 4th. It is now still 8% from its all-time high. When it started to recover, I bought on a dip and tweeted my subscribers about it. My shares went up 14% already. I am very bullish on ASML and believe it has the potential to double in two years. I will explain why in this video. First of all, let's review my price forecast that I published on September 15th, 2021. At the time, I predicted that ASML would be at $910 a share by the end of November 2021. During that time, the price was $889.33. As of today, the price is $830.02, it certainly went down. Will I be setting a new price target? I will talk about that in the next few minutes. I just want to let you know that I'm still very bullish about ASML. I will explain why. First, let's look at the price chart of ASML, which is the candlestick chart. I'm comparing ASML with SMH, which is the semiconductor ETF representing the semiconductor industry. Then I plotted here QQQ representing the movement of NASDAQ 100 and SPY representing the movement of SMP 500. This is a daily chart for one year. As we can see, ASML went up a very impressive 121%, whereas the semiconductor industry represented by SMH went up by 56% impressive, but not as good as ASML. And then QQQ went up by 42% and SPY up by 37%. Definitely, ASML has outpaced all these other indicators. If you look at the chart from September 1st until today, ASML is not performing as well. We see the dip here after September 14th, and of course, the broad market also went down as well as SMH, but ASML has gone down a lot more, and since October 5th, ASML has recovered, but it has not nearly recovered as much as the broad market or SMH. One of the reasons is because of this red candle here, which is October 20th. That's when ASML announced their quarterly earnings. I will talk about that in the next few minutes. This is a report from Investor Business Daily about ASML's quarterly earnings. It says that they earned the equivalent of $4.97 a share as opposed to the analyst expectation of $4.61, which is good because they beat the expectation. However, the sales was only $6.1 billion in this quarter as opposed to the expectation of $6.19 billion, so they missed the expectation by a little bit. To make this situation a little worse, the ASML management forecasted the sales of $5.87 billion, and the analyst's expectation was $6.12 billion, so the revised forecast came below the analyst's expectation. That's the reason why the stock price dipped. Why did the management lower their forecast for sales for 2021? That's because they said it was because of supply chain issues, component shortages. That's the main reason that I'm still bullish about ASML. The supply chain shortage is pretty much affecting everybody in the world. This is really not surprising that ASML suffered an earning dip. However, because of ASML's strong positions in the EUV and the DUV markets, the businesses are not going anywhere else. They are the monopoly or near monopoly in those markets. It's just a matter of delaying the revenues, but they're not losing the revenues in the next few years. This is a slide from my March 28 video where I did my deep diving on ASML for fundamental analysis. In that video, I provided information saying that ASML absolutely dominates the semiconductor lithography market with 100% of the market share in the EUV market and 88% market share in the DUV market. The EUV and DUV machines are needed by the semiconductor foundries, especially if any foundry want to make any semiconductor that's 5 nanometer or beyond. They will need the EUV equipment, and that's why ASML is well-positioned to benefit from the expansion of the semiconductor industry that's been happening in the last couple years, and it will continue at least for the next two, three years. This is from the recent presentation by ASML management to the stockholders with regard to their quarterly earnings for the third quarter of 2021. We can see here the EUV where they have the monopoly. The EUV equipment occupies 54% of their revenues, and these slices are the DUV-related equipment, and that occupies 43% of their revenues. Looks like their main customers are either in Taiwan or South Korea, and some customers in China, Japan, and the US. If you look at the world fat plant investments in the next few years, Intel announced that they would invest $20 billion in the US and probably up to $95 billion in Europe in the next few years, and then Taiwan Semiconductor announced recently that they would invest $100 billion for foundries in the next three years in Taiwan, US, or in Japan, and then Samsung announced that they would invest $300 billion through 2030, mostly in Korea and in the US. With all these investment activities, ASML would definitely benefit from providing equipment to these fat plants. If you like what you've seen so far, I'd like to encourage you to click the like, subscribe, and notification button. This will enable you to receive notification when I publish my next video. It will also encourage me to publish more videos like this in the future. Thank you very much. Let's continue. We have a lot to cover. Let's look at some of the financial figures represented with these charts. These are from the Better Investing website, stock selection guide database. If you look at ASML sales, ever since 2012, 2013, the sales has been going up very steadily along this straight line with a very steep slope going upward. EPS has been very impressive also. The EPS growth has been 23% since 2012. If you look at more recently, it's been 30% growth since 2016, and they have been aggressively buying back stock, which is another very bullish sign for the investors. The management forecasted that for 2021, the sales growth will be 35%. That's definitely a very positive number. Return on equity in the last six, seven years has been going up steadily. Debt to equity ratio, even though it's been going up a little bit in the last few quarters, but it's still under control because it's only 27%. The company definitely is very rich in cash, and that's why they're being aggressively buying back stock. Let's look at the valuation of the company. First of all, I looked at the trailing P ratio, forward P ratios, and peg ratios of the major semiconductor companies. ASML is here. They have trailing P of 53, forward P of 41, and peg ratio of 1.69. The P is a little bit on the high side compared to the other companies, but not as high as NVIDIA, for example, or NXP. The peg ratio of 1.69, again, is on the high side, but not the highest one. The reason why ASML can justify these high PE ratios and peg ratios is because it's being growing fast, and also it's got the monopoly or non-monopoly in the lithography market, and they have to track record to support those numbers. Then I use the assumption of 50 PE ratio, which is close to the trailing PE now 53, and then annual earning growth of 29.8%, which is a figure from Yahoo Finance, and their past five-year growth was 17.9, but the trailing 12 months for this year is 28. If you look at the EPS growth that we discussed a couple of minutes ago, since 2016 it's been 30%. Therefore, 29.8% PE growth is reasonable for the next few years, especially considering the worldwide semiconductor shortage, and the aggressive investment plans Samsung, Towing Semiconductor, and Intel have put in place. There will be a lot of investment activities. That means there will be a lot of sales generated from those activities for ASML. From the recent management forecast of $5.87 billion of sales for the fourth quarter, then I look at the historical net margin and came to the conclusion of approximately $6.7 billion of earnings for 2021, and then using the trailing 12-month figures, I calculated their estimated stop values for 2021 through 2025, and they range from $760 a share to $2,156 a share. As you can see, it will approach $1,600 a share in 2024, which is double the value of today, and usually the stock price will lead the actual valuation by up to a year if the company is looking very bullish, and that's why there's a good possibility that ASML can reach $1,600 a share in a couple of years. But for now, for the next few months, I have set the target of still $910 a share, the same target I had back in September, except I have stretched the time horizon to the end of February 2022 in light of the stock market reaction to ASML in the last couple of months, although it's recovering, so I'm very optimistic about the stock price reaching this particular target. Let's look at the other analysts' opinions. So today, the closing price went from the September 15th value of $889 to $830. My target is still $910 a share, except rather than expecting that price to be reached by the end of November, I expect the price to be reached by the end of February next year. Yahoo Business maintains their 1.9 out of 5 buy rating. Same high target. The average target went down a little bit from $861 to $843. Same low target of $720. Who's Nimalier maintains his buy rating, although the overall rating got downgraded a little bit from A to B. Still a pretty good rating. Quantitative rating downgraded from A to B and fundamental rating downgraded from B to C. TipRanks.com maintains its moderate buy rating. High target went down a little bit from $998 to $979. Average target went from $949 to $881 and low target $874 to $720. C&Money maintains its buy rating. High target went up actually from $975 to $1030. Medium target went up also $925 to $966. Low target went up $743 to $779. The Street.com lower the rating from buy A- to B. Still a pretty good rating and the target is lower from $1120 to $1067. Overall my target of $910 is between the high targets here and the medium targets. Let's look at the chart. This is the data chart for the last few months. As I mentioned I bought at this point. I saw the price coming down but I had been very bullish about our stock. I was just waiting for the start to recover and when it finally started to recover I took a chance and bought the first day of recovery. With the expectation that if it didn't sustain the recovery and start dropping again I would sell the shares quickly but fortunately it continued to recover. Actually I bought more shares after it dipped here and then I saw the shares that I bought here about 6 days later with about 3-4% gain but I continued to keep the shares I bought on October 5th. As of now I'm seeing 14% gain already on these shares. We can see that there is a very nice looking upward sloping channel that the price has been following since the beginning of October. As of now we are still about 7.8% from the all-time high. That means there is quite a bit of space for it to move up in the next few days. Here is an overbought situation here back in September and sure enough the price started to go down. Actually when I published my September video we were right around here and at that time I predicted that there would be a pullback pretty soon and sure enough it happened. The DMI is bullish and for MACD it's being bullish for the last 2-3 weeks. This is our lead chart. Also we see this nice upward sloping channel. Our SI is at the level where it's probably getting to be overbought so there might be a pullback for the next few hours but as we saw in the daily chart it's not overbought yet. So if there is any pullback it will probably just last for a few hours then hopefully the price will continue to march up. DMI bullish, MACD bullish in the last couple hours. Let's look at the support and resistance levels. I've drawn the Fibonacci retracement diagram. There are many ways to draw the Fibonacci retracement diagram. I like to draw it so that the different levels are validated by the historical price levels and if you look at this chart it's certainly lined up with some of the important historical levels in the last few weeks. For this chart the minimum point is right here on October 4th and the maximum point is here on September 14th. For support, the next level support will be at 807 which is the 50-day simple moving average, the blue dashed line here and then the next level down will be 799 which is the Fibonacci 50%. Next level support will be 778 which is this red line and it's Fibonacci 61% and it's also close to the 20-day simple moving average, the middle of the Bollinger Band. That will be a strong support point. And then the next level of support will be 749 which is the Fibonacci 78%. For resistance the next level will be 845 right here. It's the upper Bollinger Band and Fibonacci 23%. And then the next level up will be 887 Fibonacci 0% which is not the all-time high, that's the closing price of the day when the price reached the all-time high for intraday basis. And then the next level up of course will be the intraday all-time high of 895 and then the next level up will be 927 that's actually the Fibonacci extension 23%. What are my strategies? As I mentioned I bought ASMR on a dip on October 5th when the price started to recover and actually I still have shares that I bought more than a year ago that I'm holding for the long term and I've been shrink trading the rest of my shares. In general I will buy ASMR shares when the price bounces from a key support level like what I did on October 5th or when positive news breaks out and I will sell when it drops at a key resistance level or when adverse news breaks out. And I will tweet my subscribers when I buy or sell ASMR shares or when major news breaks out. I'd like to encourage you to subscribe to my Twitter account which is DanMarketL for example. On October 5th I tweeted that I bought more ASMR and BNTX shares. And then on October 20th I said I bought more shares on a dip. On October 26th I said I sold the shares I bought on October 20th, these. And meanwhile I was still keeping the shares I bought on October 5th. That's where I bought the shares, October 5th and then October 20th. After the earnings announcement I believe that the market overreacted to the decrease in earning forecasts by management. That's why I bought on a dip again. And then I sold on October 26th around here with about 3-4% gain. With this particular purchase I am still sitting on a 14% gain, which is certainly very nice. If you like what you've seen so far I'd like to encourage you again to click the like, subscribe and notification button. As usual I will very much appreciate your comments, questions and suggestions. Let me recap my price forecast. I expect the price to reach $910 a share by the end of February 2022. So today the price closed at $830.02. I'd like to remind you that I'm not a financial advisor. I share my stocks trading strategies and analyses for educational purpose only. If you want to buy or sell stocks you should definitely make your own decision and you should consult with your financial advisors before you do so. This wraps up my video for now. I will chat with you again in the next few days. In the meanwhile I'd like to wish you the very best of luck with your financial investments.