Best Chip Stock to Buy on the Dip in October

The equity currently sports attractively priced premiums

Digital Content Manager
Oct 6, 2021 at 2:43 PM
facebook twitter linkedin


As investors head into the fourth quarter and set their investment strategies for the remainder of 2021, an important factor to consider are seasonality trends for October. Semiconductor stocks have attracted considerable attention this year, amid a global chip shortage. Today, we will focus on one name that could turn in big gains by the end of the month: Lam Research Corporation (NASDAQ:LRCX). The stock stands out as one of the 25 best performers in October going back 10 years, according to a list compiled by Schaeffer's Senior Quantitative Analyst Rocky White.

Though Lam Research stock has cooled off in recent months, it is four months removed from a June 1, record high of $673.80. The shares have since struggled with overhead pressure at the $620 mark, though the $550 level seems to have emerged as support, containing LAM's latest pullback. LAM was last seen down 0.5% to trade at $552.91, though the security still sports a 61.9% year-over-year lead. Plus, there is reason to believe the security could bounce back towards record levels in the coming weeks.

LRCX

Per White's data, LRCX has seen nine positive one-month returns over the past 10 years, averaging an 8.1% pop in this time period. That makes it the best chip stock on the list, with the second best one-month return. A similar move from its current perch would put the security back over the $597 mark -- much closer to its record high. 

Now could be a great opportunity to weigh in on Lam Research stock's next move with options. LAM's Schaeffer's Volatility Index (SVI) of 34% sits higher than 20% of readings from the past year, suggesting the options market is pricing in low volatility expectations for the equity at the moment.

Trader: Sell These 8 Stocks in 2021

1633101108

 




 
Special Offers from Schaeffer's Trading Partners