Key Points
ASML is a compelling stock, with a monopoly on some costly semiconductor equipment.
Its future looks bright, and its stock is appealingly valued.
Looking for an impressive growth stock? Well, consider ASML Holding (NASDAQ: ASML). It's averaged annual gains of 27.6% over the past decade, enough to turn a $3,000 investment into more than $34,000.
After such torrid growth, you might wonder if the stock is now way overvalued. I'm happy to report that it doesn't appear to be. Its recent forward-looking price-to-earnings (P/E) ratio of 32 is a bit below its five-year average of 34.
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But should you invest in this company? Well, you should only decide after having learned a lot about it. But for starters, know that ASML specializes in making the lithography equipment needed for semiconductor manufacturing. (Its machines etch intricate circuitry onto silicon wafers, and it was recently the only supplier of advanced extreme ultraviolet systems (EUVs). Its equipment is costly -- with its latest system priced above $400 million -- and its systems tend to last for several decades, which gives ASML a lot of nice, recurring revenue from servicing contracts.
It's fair to expect ASML to keep growing over time, but there could be some hiccups, such as if its business with China is affected by tariff wars or other geopolitical issues. One tailwind should be Nvidia's recent partnership with Intel to build out technology for artificial intelligence (AI).
Note, too, that ASML is a dividend-paying stock. Its recent dividend yield of 0.76% may seem small, but its total annual payout to shareholders has grown at a good clip, rising to a recent $7.15 per share from $6.21 in 2022 and $3.13 in 2019.
Given ASML's reasonable valuation and its dividend-paying status as well, it's certainly worth a closer look.
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Selena Maranjian has positions in ASML and Nvidia. The Motley Fool has positions in and recommends ASML, Intel, and Nvidia. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.
