 Hey everyone, this is Dan with another episode of my asml videos I posted my last asml video on August 23rd, 2022. At that time asml was at $545 a share. I predicted that the price would go up. Five months later, as of market close yesterday Friday, the stock price has gone up by 24% already. I believe asml will go up by at least another 10% in the next few months. I've been buying and selling asml stocks since 2020. I still own the first batch of asml shares that I bought on November 30th, 2020 and I'm seeing 58% gain on those shares. My YouTube stock analysis videos are byproducts of the research that I do for myself as I try to manage my own investments. I also have a Twitter account which is DanmarketL. By way of my Twitter account, I've been sharing with my subscribers some of my trades and any significant events related to the stocks that I follow. For example, on November 10th, when the CPI number was posted and it turned out to be rather low, I bought asml shares. Six days later, I sold half of the asml shares I bought six days ago at 9% gain. On January 25th, I bought asml shares again and then on February 1st, I sold those shares at 2.7% gain. If you want to know what kind of trades I'll be making, please subscribe to my Twitter account. I also suggest that you click the like, subscribe, and notification buttons below this YouTube video so that you will be notified when I post my next video. It'll also encourage me to make more videos like this in the future. Thank you very much. Let's get into details of asml now. We have a lot of interesting stuff to cover. Let's look at how asml has been moving in the last year. You can see it has gone up 6.93% when SPY went down 7%. The semiconductor ETF, SMH also went down 7.11% and the NASDAQ 100 ETF QQQ went down even more at negative 12%. Asml has certainly performed well compared to these other ETFs. The yesterday chart is even more impressive. Asml went up by 25% when SMH went up by 27% with SPY, the S&P 500 ETF being up only 9% and QQQ, the NASDAQ 100 ETF up 17%. The main reason why asml has been doing well is that they have the monopoly on the design, manufacturing, and sales of the extreme ultraviolet or EUV machine that is the only machine which is capable of making chips that are 5 nanometers and smaller. They also have 88% of the market share for the DUV machine which makes chips of larger dimensions. DUV stands for deep ultraviolet. As you probably know, the smaller the chip or processor dimension, the faster it is and the less energy it consumes. The leading chip makers and chip designers such as Intel, Taiwan semiconductor, Samsung, NVIDIA, and AMD are all competing to make processors of smaller and smaller dimensions. In other words, they all need the EUV machines made by ASML for their latest and greatest processors. ASML announced their fourth quarter earnings on January 25th. Since they are headquartered in the Netherlands, their financial figures are denominated in euros. The exchange rate as of today is 1 euro for 1.08 dollars. The fourth quarter gap EPS of 4.6 euros beat the estimate by 0.27 euro, which is very positive, and the revenues of 6.4 billion euros beats the estimate by 50 million euros, and the revenues was up 28.5% year to year. Again, another impressive number. They have a very impressive gross margin of 51.5%, and ASML expects 2023 net sales to grow over 25% compared to 2022, and a slight improvement in the gross margin. This is a graphical representation of the quarterly EPS. As you can see, they have been experiencing rather steady growth in EPS. As of today, the PE ratio of ASML is 44, and the PEC ratio is 1.48 according to finwoods.com, and these are pretty good numbers, especially the PEC ratio of just 1.48 for a high-tech company. That's definitely very impressive, and that's why I'm bullish on ASML. Let's check out a few ASML financial charts from the SSG database published by Better Investing. The sales of ASML have been growing steadily since at least 2013, according to this chart. And most impressively, it was able to avoid the sales dips in the industry in 2019 and 2020. The EPS has been growing nicely. The debt to equity ratio is much lower than the industry average, which is a good sign for ASML. Their return on equity jumped up in the last couple years. A few industry developments will help ASML tremendously in the next few years. First of all, the US passed the CHIPS Act on August 9, 2022. Based on the CHIPS Act, $39 billion will be spent by the US government to incentivize chip manufacturing activities. As we mentioned, ASML has a monopoly on the EUV machines and 88% market share on the DUV machines. Since all the new and advanced FAT plans will be using the EUV or DUV machines, ASML stands to benefit tremendously from the CHIPS Act. The EU, European Union, is also in the process of passing their own legislation, which will be similar to the US CHIPS Act. It's been reported that about 15 billion euros will be used by the EU to incentivize CHIPS manufacturers. In addition, it was announced within the last few months that Intel will be spending $20 billion for new FAT plans in the US and $19 billion for new FAT plans in Germany. Taiwan Semiconductor announced that they will be spending $100 billion in the next three years in Taiwan, US, and Japan, including building two plans in Arizona with $40 billion of investment in Arizona alone. And then Samsung announced that they will be spending $300 billion through 2030 in Korea and the USA, and with $200 billion amount of $300 billion devoted to 11 new plans in Texas. These will all benefit ASML. Here's something that will work against ASML, which is the US CHIPS ban on China related to certain advanced semiconductor technologies. The CHIPS ban issued on October 7, 2022 prohibits the sale to Chinese customers the advanced chips with high performance and fast interconnect speed. Because of the October ban and earlier ban imposed by the Trump administration, ASML has not been able to sell nor ship EUV machines to China since 2019. They are still selling and shipping the DUV machines to China. However, the current US administration is also putting pressure on ASML to stop selling DUV machines to China. We don't know about the outcome of that particular initiative yet. Fortunately, these bans have not impacted the revenues or EPS of ASML by too much. We will look at the financial numbers in a few minutes. This is the list of the five nanometer chips in the industry. They are all built by ASML EUV machines. Among these chips, the Kirin chips for high silicon, which is a Huawei subsidiary, is no longer in production at Taiwan semiconductor because of the US CHIPS ban on China. And this is the list of the three nanometer chips produced by the ASML EUV machines. They are just starting to be produced in small quantities and will ramp up in 2023 and 2024. There's no lack of demands for the EUV and DUV machines from ASML. Actually, because of the recent geopolitical tensions in the world and chip shortages, both the US and EU are trying to get more fat plants built within their own borders. That means they will create redundancies of chip making equipment, which will lead to more and more businesses for ASML. And that's also why I'm so bullish about a company. Let's look at the valuation of ASML. I first compare the PE ratios and PEG ratios of major semiconductor companies as listed in Yahoo Finance. As you can see, even though the PE ratio of ASML is at about 45 and it's on a high side, the PEG ratio according to Yahoo of 1.1 is very good compared to the other companies. The finwis.com website lists ASML's PEG ratio at 1.4. 1.1 to 1.4 is definitely a good PEG ratio for a high-tech company. I assume the annual EPS growth of 25%, which is conservative, compared to the growth of 27.46% in the last five years and Yahoo Finance estimate of 29.8% in the next five years. Starting with the current PE ratio of 55, I assume the PE ratio of 50 for 2023, 40 for 2024, and then 35 and 30 for the next two years. And based on these assumptions, I arrive at the stock prices of 780, 1, 781, 781, and 855 at the end of 2023, 2024, and 2025. From these numbers, I take the conservative projection of just $750 a share to be reached within a year from today. As for the geopolitical risk related to China, we can see from this chart that the percentage sales in China decreased from 15% in the third quarter of 2022 to 9% in the fourth quarter of 2022. With this decrease, ASML sales and EPS for the fourth quarter are still pretty impressive. Therefore, I believe any further reduction in China's sales will not impact the company much in the future. With the strong cash flow ASML has been generating, the company has been buying back stock aggressively in the last few years. Since 2018, ASML has bought back shares at the equivalent of 4.6% of the current market cap. Let's see what the professional analysts have been saying about ASML. First of all, let's repeat, between my last video and this video, the share price has jumped up from $545 a share to $696 a share. My target was $650 a share by the end of August 2023, and now it's already at $696. My new projection is that the stock price will be at least $750 by February 3rd, 2024. Yahoo Business improved their buy rating from a rating of $1.9 to $1.7, in this case the lower the number the better, and then the high target got revised actually downwards a little bit from $10.30 to $9.23, but it's still definitely higher than the current price. The average projection got revised up from $720 to $7.52, and the low projection got revised up from $472 to $501. Louis Namelier improved its rating quite a bit, it's a buy rating, and the overall rating has been improved from a D rating to a B rating, the quantitative rating has been improved from D to B primarily because of the pickup in stock price recently, and the fundamental rating remains at C. TipRanks.com gives a strong buy rating, the high target has been revised up from $794 to $850, the average target got revised up from $661 to $730, and the low target got revised from $590 to $521. And then CNMoney gives a buy rating, the high target got revised up from $794 to $850, the median target revised from $600 up to $730, and the low target revised up from $472 to $700. The street.com upgraded their rating from a buy B minus to buy B, and the target price has been increased from $649 to $789. My one-year projection of $750 share is just above the average price targets among these numbers, and that's why I'm comfortable about my $750 target. From my calculations, we know how I arrive at that particular target. What are my trading strategies for ASML? First, I bought ASML shares on 11-30-2020, and currently I'm seeing a 59% paper gain. I'm holding these shares for the long term, and I've been swing trading additional shares. I will buy ASML shares when it bounces from a key support level or when positive news develops about a company. Now sell ASML shares when it drops below a key resistance level or when adverse news develops. I will tweet my subscribers when I buy or sell ASML shares or when major news breaks out about a company. Let's look at the ASML charts in more details. For each of the charts that I'll be showing in the next few minutes, I will also show the 50-day exponential moving average with a green dash line and the 100-day exponential moving average with a yellow dash line and the 200-day exponential moving average with a red dash line. I'm showing here three panels. On the left side is an hourly chart for ASML. The middle panel is a daily chart, and the right panel is a weekly chart. On these charts, I'm showing the exponential moving averages, 50 days, 100 days, and 200 days in the dash lines, the bowling demands, and the trade volume, RSI indicator, DMI indicator, and MACD indicator. Now, if you look at a daily chart, we can see that ASML has been pretty much trending up since the late October period. At this point, it's not quite touching the upper bowling demand yet. RSI value, it's at about 59, not extremely high. Nevertheless, I decided to sell some of my ASML shares on Thursday, and the reason why is because it started to come down, but the main reason why is really because of the broad market. If you look at the chart for QQQ, the NASDAQ 100 ETF, you can see that it's getting to be pretty high, and especially on Thursday, it was way above the upper bowling demand. And also on Thursday, during aftermarket, Apple, Amazon, and Google announced their fourth quarter earnings, and those earnings were unimpressive or even disappointing. And when QQQ and also SPY started to go down during aftermarket, that's when I sold some of my ASML shares and some other long positions to take profit. If you look at SPY, same situation, way above the bowling demand, Thursday, and then it started to come down during aftermarket, here Thursday aftermarket, started to come down, and then sure enough, Friday it continued to drop, and I sold closer to peak here on Thursday. So the timing was pretty good. Now let's go back to ASML. If you look at the hourly chart, it shows the same trend like SPY and QQQ, it's been coming down since Thursday. On the weekly chart, it's not quite touching the upper bowling demand yet. The RSI value currently is at about 64. It's not high, but not as high as back in September of 2021 when it peaked. But if you look at again QQQ on the weekly chart, it's pretty high. It's above the upper bowling demand, and that's why I believe the overall broad market is due for a correction. Even though ASML has very strong fundamentals, I don't think it'll be immune to the ups and downs of the broad market. And that's why I believe that it was a good time to sell on Thursday to take some profit. Again, I still hold some shares that I bought way back in 2020, and I'm holding those shares for a long-term gain. And then if you look at the daily chart, you see if it continues to fall, the next level of support will certainly be the middle of the bowling demand, which is 20 SMA. And if it goes below that, the next level of support will most likely be here around 629, 630. And then the next level support will be around the 50-day moving average, 610. And then here, this gap closure at 596. And then finally at this point, 530, which is the previous bottom and a very strong support level. The lower bowling demand actually coincides with the 50-day moving average. So that'll be a very strong support, 608. Now, if ASML starts to rebound at any one of these support points, especially if it drops to the middle of the bowling demand or to the lower bowling demand and starts rebounding, I might be buying more shares. And then of course, if the situation is really bearish, then the support will be seen at this level, 530, which was a previous bottom reached on December 28th. Let me say it again, my price target for ASML is $750 is shared by February 3rd, 2024. Thank you for watching all the way here. I'd like to remind you to click the like, subscribe, and notification buttons below this video. As usual, I will very much appreciate your questions, comments, and suggestions. I'd like to remind you that I'm not a financial advisor. I share my stop trading strategies and analyses for educational and entertainment purposes only. If you want to buy or sell stocks, you should make your own decisions, and you should definitely 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.