Today I’m selling ASML Holding (ASML) out of my long-term 50 Stocks Portfolio. My take on Asmel hasn’t changed: this is one of the key chip equipment companies in the drive to produce smaller and denser chips. What has changed in the market and the global economy. I think that technology, and especially chip stocks, are in a downtrend that has a lot longer to run. And that recent U.S. restrictions on advanced chip technology exports to China will set off a trade war that will come down heavily on companies such as ASML.
The question for long-term investors right now is how much short-term pain they are willing to put up with in exchange in order to keep long-term positions in place. In the case of ASML I’d like to avoid further pain. And I look forward to rebuying these shares for this portfolio when the tide is not setting so strongly against the sector and this stock.
Not that I’ve avoided pain to date. As of the close on October 10, the shares are down 46.44% for 202e to date. ASML has been a member of my long-term 50 Stocks since March 29, 2021. That position is down 35.02% since that date as of October 11.
I’d note that despite that drop ASML shares still sell for 29.49 times trailing 12-month earnings per share and 21.83 times projected forward 12-month earnings per share. The forward PE ratio does not reflect any drop in revenue and earnings as a result of the U.S./China trade war.
