How Adam Khoo uses StockOracle™ to analyze ASML Stock

Key Concepts

• Undervalued Stock: A stock trading below its intrinsic value.
• Intrinsic Value: The perceived or calculated value of a company or asset, independent of its market price.
• Moat (Economic Moat): A sustainable competitive advantage that protects a company's long-term profits and market share from competitors.
• Financials: A company's financial performance and health, typically assessed through metrics like profitability, growth, and balance sheet strength.
• Predictability: The degree to which a company's future earnings and performance can be reliably forecasted.
• Profitability: A company's ability to generate earnings relative to its revenue or assets.
• Growth: The rate at which a company's revenue, earnings, or market share is increasing.
• Financial Balance Sheet: A statement of a company's assets, liabilities, and equity at a specific point in time.
• Valuation: The process of determining the current worth of an asset or company.

ASML: An Undervalued Dominant Company

The discussion focuses on ASML as a prime example of an undervalued company with a strong economic moat. The intrinsic value of ASML is estimated at $948, while its current market price is $725, indicating a significant undervaluation.

Financial Health and Competitive Advantage

ASML's financial profile is described as solid, characterized by:

• Predictability: The company exhibits a high degree of predictability in its financial performance.
• High Profitability: ASML demonstrates strong profitability.
• High Growth: The company is experiencing significant growth.
• Very Strong Moat: The economic moat of ASML is assessed as exceptionally strong, scoring a 9 out of 10. This high score signifies its position as one of the most dominant companies globally. The importance of the moat is emphasized, with the speaker stating, "Again to me the mode is the most important thing." The rarity of companies achieving a 9 out of 10 moat score is highlighted, underscoring ASML's exceptional competitive advantage.
• Very Strong Financial Balance Sheet: The company maintains a robust financial balance sheet.
• Very Attractive Valuation: The current valuation of ASML is considered very attractive due to its market price being significantly below its intrinsic value.

Conclusion

ASML is presented as a compelling investment opportunity due to its strong fundamentals, exceptional competitive advantage (moat), and attractive valuation. The company's intrinsic value significantly exceeds its current market price, suggesting potential for substantial future returns. The 9 out of 10 moat score positions ASML as a dominant player with a durable competitive edge, further reinforcing its investment appeal.