I liked Lam Research (NASDAQ:LRCX) last January, and again in late October. The stock has dutifully rewarded my admiration, jumping some 57% over the past year. To quote one of the greatest '80s TV shows, "I love it when a plan comes together."

Of course, we're not exactly back to the "happy days are here again" point of the cycle, either. For the company's fiscal second quarter, sales were up almost 12% on a sequential basis, but still down 6% from last year. Likewise for earnings -- up nicely on a sequential basis and down modestly versus last year.

Not only were results for this quarter a lot better than initially expected, but it also seems like expectations for the future were on the low side as well. The company announced that orders were up 24% sequentially in this quarter, and the average estimate for the March period has gone up more than 10% since then (to say nothing of the stock price as well).

There are competitive threats, of course. Applied Materials (NASDAQ:AMAT) and TokyoElectron aren't wallflowers, and the latter has done a particularly good job of keeping a firm hand on its business in Japan (though Lam is making progress). What's more, the usual concerns persist that foundries such as Taiwan Semiconductor (NYSE:TSM), or memory chip makers such as Hynix and Samsung, have learned their lesson and won't buy as much machinery.

Perhaps that's true, but companies such as SanDisk (NASDAQ:SNDK) are seeing plenty of demand for chips, and more products like the Motorola (NYSE:MOT) RAZR phone and new Apple (NASDAQ:AAPL) iWhatevers aren't going to hurt demand any. If the foundries want to stay in the game, they'll spend up.

At the risk of hubris, Lam Research was an easy pick in January 2005. A year later, though, it's not quite so simple. Valuations have caught up in anticipation of a semiconductor recovery, and the easy money is off the table. Still, there's nothing saying that the company won't continue to outperform, and there's plenty of room for me-too investors to jump into the cycle and push all of these semiconductor equipment stocks higher.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).