|Bid||0.00 x 1000|
|Ask||0.00 x 4000|
|Day's Range||42.66 - 44.97|
|52 Week Range||28.39 - 53.68|
|Beta (3Y Monthly)||1.85|
|PE Ratio (TTM)||4.97|
|Earnings Date||Sep 26, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||48.04|
Futures fall: The stock market rally and Fed rate cuts are no match for President Trump's escalating China trade war. Watch Apple, Boeing, Tesla, Micron and Nike.
(Bloomberg) -- Semiconductor companies and Apple Inc. fell sharply on Friday, as the trade war between the U.S. and China continued to escalate.China’s Ministry of Finance said the country plans to levy retaliatory tariffs on another $75 billion of U.S. goods, pressuring the securities in pre-market trading. Their losses were extended following the open, after President Donald Trump subsequently said that he would announce his response Friday afternoon.Apple fell as much as 3.9%. The iPhone maker is heavily correlated to trade issues because China is both a major part of its supply chain and a notable market for its products. The company derived nearly 20% of its 2018 revenue from China, according to data compiled by Bloomberg.Chipmakers have been similarly volatile because of the trade war. The Philadelphia Semiconductor Index dropped 3.6% on Friday, and every member of the benchmark industry index was in negative territory.Among notable decliners, Qualcomm Inc. lost 3.3% while Nvidia Corp. was off 5% and Micron Technology shed 3.5%. Broadcom Inc. was down 4.9% and ON Semiconductor Corp. lost 5.4%.Technology stocks were the weakest-performing sector on Friday, with the S&P 500 information technology index down 2.4%. The S&P 500 overall fell 1.4%.(Adds Trump’s response in second paragraph, updates prices to market open)To contact the reporter on this story: Ryan Vlastelica in New York at firstname.lastname@example.orgTo contact the editor responsible for this story: Catherine Larkin at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Micron Technology (NASDAQ:MU) has done an excellent job of managing its finances in the present semiconductor industry downturn.Source: Charles Knowles / Shutterstock.com A closer look shows Micron stock can withstand this turbulence just fine. It has plenty of net cash and has managed to convert its net income to free cash flow. Micron's Huge Cash PileFor example, even though MU's sales fell 15% from $21.9 billion to $18.5 billion during the first nine months to May 31, MU has actually increased its liquidity. Net cash (after all debt), securities and investments rose 11% from $2.7 billion at the beginning of the year to over $3 billion:InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe reason: free cash flow has been managed extremely well. Here is what they have done: * Spent 17% more on capital expenditures than last year's first nine months * Used 81.6 of free cash flow to buy back shares * Made $576 million on debt repayments * Used $1.3 billion more than available free cash flow, yet net liquidity rose to $3 billion. * 10 Stocks to Own Through a Global Recession This can be seen in the table below:How did Micron's liquidity actually rise even though its change in cash was -$1.3 billion for the first nine months? The answer, they bought securities. The table below shows this:This shows that the company increased its balances of securities by $1.2 billion. Note how that corresponds to the column "Bought Securities" in the previous table of -$1,249 million. The difference probably lies in the valuation of the securities being lower at the end of May 2019.Here is the main point, despite a huge decrease in sales and free cash flow for the year so far, Micron has managed its liquidity extremely well.To understand this better, let's take a look at how it makes its free cash flow. Free Cash Flow ConversionAnalysts like to use a term called "Conversion" when describing the ability of a company to convert net income into free cash flow (sometimes they use it to mean converting Sales or EBITDA into free cash flow, as well).Looking Micron's free cash flow conversion, the table below shows it has fallen a lot:So it Micron has only been able to convert 36.7% of net income into free cash flow. The reason is because it has fixed spending on capital expenditure and less working capital, including changes in inventory and receivables, to translate into real cash flow.Note that the latest quarter's conversion was only 75% of the prior quarter. We can use that number to estimate the upcoming August 30 free cash flow. Management has given us guidance. Free Cash Flow EstimatesOn June 25, Micron management gave very explicit guidance about its upcoming fourth quarter:Since sales will only be 6% lower based on this guidance, we can revise the conversion factor to about 45% (based on an adjustment of the 75% conversion ratio above), and then estimate free cash flow.So even with lower sales and net income, Micron will make positive free cash flow. This will increase the MU's liquidity even further, all other things being the same.Management recently said at a recent conference indicated that it is starting to see demand coming back in a meaningful way. So there is every likelihood that the net income and free cash flow estimates will be on the higher side of these estimates. Why Is Free Cash Flow So Important?Free Cash Flow feeds into the company's net liquidity, which makes up a substantial part of its shareholders' equity or book value. For example, MU's book value grew last quarter from $33.1 billion to $36.1 billion, even though sales growth was negative, as we showed above.In fact, as long as MU stays free cash flow positive, the book value will tend to grow, unless it has a huge drop in the value of its inventory valuation, which is not likely. Targeting Price-to-Book ValueMicron stock tends to trade around its price-to-book value ratio (P/B). For example, right now its market value is book value per share is $32.02 ($36.1 billion book value dividend by 1.13 billion estimate diluted shares outstanding. So its P/B is 1.35 times.Assuming MU book value grows again due to positive free cash flow as we have shown and higher net liquidity balances in this coming quarter, MU stock will likely trade higher if the ratio stays the same.At its peak price last year, MU traded for over 2.2x P/B, and at its low 1x P/B. On average it traded for 1.63x its book value. Based on my forecast of positive free cash flow this year, the book value will reach $32.02 per share.Using last year's average P/B ratio, and assuming MU's product demand continues to improve, Micron stock could reach over $52 per share this year. What to Do?Don't get overly concerned about what you read about Micron's finances and inventory issues. The company has proven it can handle demand downturns in its semiconductor business and still make positive free cash flow. * 11 Stocks Under $10 to Buy Now At today's price the stock is likely to do well based on its average price-to-book value trading in the past.As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy on the Dip * 7 Marijuana Stocks With Critical Levels to Watch * 7 Internet of Things Stocks to Buy Now The post Micron Stock: Concerns About Its Finances Are Overdone appeared first on InvestorPlace.
BOISE, Idaho, Aug. 22, 2019 -- Micron Technology, Inc. (Nasdaq: MU) announced today that it will hold its fiscal fourth quarter earnings conference call on Thursday, September.
At its heart, the argument over Micron Technology (NASDAQ:MU) is a battle over how to value a cyclical stock. It's not an easy task. In a matter of quarters, the MU stock price went from being absurdly cheap -- Micron stock traded at less than 4x earnings at points last year -- to questionably expensive. Fiscal 2020 consensus EPS is just $2.53, implying a 17.5x forward P/E that's not all that attractive in the context of the semiconductor sector.Source: Charles Knowles / Shutterstock.com Even Wall Street can't make up its mind. As Barron's noted last week, analyst targets for the MU stock price range from $28 to $90. It's a company that earned $12+ in adjusted EPS in fiscal 2018, posted a $1 per share loss as recently as FY12, and is expected to see a two-year, approximately 80% decline in EPS in FY20. * 10 Marijuana Stocks That Could See 100% Gains, If Not More In terms of that argument, I wrote recently that I lean toward the bearish side. The recent rally in Micron stock looks ripe for profit-taking. Earnings may not be set to rebound any time soon. And I thought the Q3 report that sent the MU stock price skyrocketing was much weaker than headlines suggested.InvestorPlace - Stock Market News, Stock Advice & Trading TipsCyclical arguments aside, however, there's a risk to MU shares that might not be fully appreciated at the moment. Micron is exposed to the U.S.-China trade war in a way that goes beyond the standard macro exposure of most semiconductor stocks. News on that front thus is likely to create volatility in Micron stock in the near term. And if the news winds up being as bad as it appears, it could send MU shares back toward recent lows. The Huawei Problem for Micron StockThe Trump Administration has made a clear target of Chinese telecom equipment manufacturer Huawei. The White House effectively blacklisted the company earlier this year, citing security concerns. President Donald Trump himself said this week that he wasn't interested in allowing Huawei "to do business at all" with American companies, though the federal government soon after gave Huawei another 90-day extension.Huawei's tenuous status has been an issue for tech stocks, and particularly semiconductor stocks, for some time. Companies like Broadcom (NASDAQ:AVGO), Qorvo (NASDAQ:QRVO), and Intel (NASDAQ:INTC) all have seen revenue hits from ceasing or moderating sales to the networking giant. Micron's rival Western Digital (NASDAQ:WDC) announced in June that it had stopped doing business with the Chinese company altogether.For Micron, Huawei is a key customer. Per its 10-Q, 13% of revenue for the first three quarters of fiscal 2019 came from Huawei. And that's with lower-than-expected revenue so far this year to begin with. On its Q3 conference call, the company cited a $200 million impact to revenue in the quarter. Q4 guidance -- which was disappointing relative to expectations -- also took a hit. And the company wrote down $40 million in Huawei-related inventory. Lower Earnings Mean a Lower MU Stock PriceThe problem for Micron is that 13% of revenue doesn't necessarily mean 13% of profits. One only need look at YTD results to see that lower sales have a huge impact on earnings.Through the first three quarters, revenue is down over 15%. Adjusted EPS has declined 32% with a lower share count.Admittedly, lower DRAM and NAND memory pricing is a big factor. But losing 13% of revenue off roughly similar expense bases in R&D and G&A tends to depress margins and lead to amplified reductions in profit.In other words, this is a big risk for Micron stock. How Does This Play Out?To be fair, a permanent Huawei blacklist doesn't necessarily mean Micron's revenue will fall by 13%. As CEO Sanjay Malhotra noted on the Q3 call, Micron supplies Huawei rivals as well (presumably including Nokia (NYSE:NOK) and Ericsson (NASDAQ:ERIC). Those rivals would take market share ceded by Huawei -- and add to their purchases of memory from Micron.But it's still unclear that European countries, in particular, are going to follow the U.S. lead in banning the Chinese equipment maker. There will be some erosion if the U.S. moves forward in preventing its companies from selling to that company.It's also possible that, at some point, the ban will be lifted. The administration could be using Huawei as a bargaining chip. A broader trade war deal could include accommodation from Huawei, and any sort of resolution likely would move chip stocks, including Micron stock, higher.But such a resolution seems a long way off at this point. In the meantime, Micron earnings are likely to decline, and the MU stock price may well follow suit. Between cyclical risk and political risk, there are plenty of reasons to stay on the sidelines here. Even bulls might want to show some patience and see if geopolitical factors don't present a better entry point.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks That Could See 100% Gains, If Not More * 11 Stocks Under $10 to Buy Now * 6 China Stocks to Buy on the Dip The post Mind the Huawei Risk When It Comes to the MU Stock Price appeared first on InvestorPlace.
(Bloomberg) -- Equity hedge funds are enjoying their strongest performance since 2009 -- with the S&P 500 index up 16% this year -- but Goldman Sachs Group Inc. warns that crowding is a risk.Funds have benefited from both a rising stock market and successful stock selection, strategists including Ben Snider and David Kostin wrote in a note Aug. 20. They’ve also concentrated their holdings into a reduced number of industries, such as health care, and into single names, particularly Amazon.com. Inc. When rallies peak, too much professional money can try to get out of the same stocks simultaneously and exaggerate declines.“Funds continue to lift portfolio weights in their top positions, which are increasingly also the top positions of other funds,” the strategists wrote. “These dynamics, along with higher leverage, lower portfolio turnover, and declining market liquidity, have boosted the performance of momentum stocks while also increasing the risk funds face from crowding.”They added that this will “make funds particularly vulnerable to a potential market unwind, particularly if accompanied by the decline in liquidity that typically coincides with falling risk appetite.”Investment banks from Goldman to Morgan Stanley increasingly study the relative positioning of funds that compete with each other to beat benchmarks. The crowding issue is in focus this month, as August has seen a spike in stock and bond markets volatility. Hedge funds rushed for safety last quarter as Treasuries rallied and concerns about economic slowdown flared, regulatory filings compiled as of last week showed.Goldman found the most popular long positions had lagged the S&P 500. The favorite short positions trailed by even more. Overall, the average equity fund return in 2019 has been 9%.Alongside the success comes some concern as well, after examining the holdings of 835 hedge funds with $2.1 trillion of gross equity positions at the start of the third quarter.Goldman found a rotation continued from technology into health care, which is now the sector with the largest overweight versus the Russell 3000 Index, which like the S&P 500, is also up 16% this year. Overweights in health care and industrials are at a 10-year high, the report said. Funds trimmed positions in semiconductors and “other stocks exposed to U.S.-China trade conflict,” according to the strategists.Also, late June and July saw a sharp rise in exposures as the Federal Reserve began to cut rates and U.S.-China trade relations appeared to thaw, the strategists said. But leverage has been trimmed again in August. While the S&P 500 rose in June and July, it’s down 1.8% so far this month. Amazon.com appeared most frequently among the 10 largest holdings of funds, followed by Facebook Inc. New names on the list of the top 50 such stocks include Allergan Plc and Micron Technology Inc.(Adds S&P 500 performance in recent months in penultimate paragraph.)To contact the reporter on this story: Joanna Ossinger in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Christopher Anstey at email@example.com, ;Samuel Potter at firstname.lastname@example.org, Todd White, John ViljoenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Micron Technology (MU) started the mass production of 16Gb DDR4 products using 1z nm (nanometer) process technology. MU has returned over 37% YTD.
U.S. stocks rallied Monday morning in an at least temporary reprieve after a mid-August rout. U.S. government bond yields rose across the curve, led by yields on 30-year bonds and 10-year notes.
David Shaw got his start in 1988, when he convinced the Wall Street investment firm Paloma Partners to back him in the new field of quantitative trading. Shaw, a brainy buy with a PhD in computer science and a complete neophyte in financial world, told his backers, “I think I can use technology to trade securities.”He was right. His firm, now the D.E. Shaw Group, has taken it’s initial $28 million in capital and grown it into a $47 billion hedge fund, earning more than $25 billion for its investors. Shaw himself retired from active leadership of the firm in 2001, although he remains connected to the trading operations.In its most recent 13F filing, the D. E. Shaw Group revealed that it has upped its holding in Micron Technologies (MU), while cutting back drastically on American Micro Devices (AMD). A brief look at the numbers tells the story.Shaw Group bought 1,386,790 MU shares, boosting the fund’s holding by 53%. At the same time, the filings show that the fund reduced its holdings of AMD by 2,996,831 shares, or 65%. Prior to the transactions, Shaw Group’s holding in AMD was almost double that in MU; the fund has now reversed that position and holds more than twice as many Micron shares as AMD. It’s a drastic change and deserves some closer examination. The Selling Case for AMDAt first glance, AMD doesn’t look like a stock to sell. It’s up almost 73% year-to-date, and is one of 2019’s successful turnaround stories. AMD chips have quickly developed a reputation for high performance and quality, and that in turn has given them the leverage needed to draw market share away from rival chip-maker Intel (INTC). AMD have been on a tear. So why the sudden change in outlook by one of the world’s smartest quant trading hedge funds?The answer may lie in that year-to-date gain. AMD opened at $18.01 on January 2; it closed at $31.18 on August 16. That gain has investors worried that, for now at least, AMD is played out, without significant room for near-term growth. Recent reviews from top Wall Street analysts support this contention.5-star analyst Cody Acree, of Loop Capital, initiated his coverage of AMD with a Hold rating, saying, “We like the solid share gains but see the valuation as fair.” His price target, $32, is in line with that, suggesting just a 2% upside to the stock. Acree is joined by Mizuho’s Vijay Rakesh and Susquehanna’s Christopher Rolland. Both 5-star analysts reiterate Hold ratings on AMD, and maintain their price targets of $36 and $34 respectively. Overall, AMD’s analyst consensus rating remains a Moderate Buy, but that appears to be shifting. Of the 10 buys, 11 holds, and 1 sell assigned in the past three months, 3 holds were given just last week. The stock sells for $31.18, with an average price target of $34.10. This suggests an upside potential of 9%. The Buying Case for MicronBetween June 2018 and June 2019, Micron didn’t look like a stock to buy. The combination of increasing supply and slower demand in the memory chip market put the obvious price pressure on the company, and MU shares were squeezed, losing half their value. MU seems to be coming out of the woods, however, as improved business confidence has led to increased demand which has in turn started working down the memory chip segment’s oversupply problem. In a conference call, Micron management said, “Demand is starting to return in a meaningful way, driven by renewed demand in the cloud and graphics segments.”Micron’s year-to-date gain of 37% has outperformed the markets, but has not sparked worries that it’s maxed out. Investors look at MU and see a stock that’s improving, with room for more growth.5-star Needham analyst Rajvindra Gill lays out the bulls’ case for MU. He says, “We view supply cuts as positive developments for Micron and the rest of the memory industry. We continue to be bullish on a stabilization in the supply-demand dynamic for NAND and DRAM in 2H19.” Gill’s $50 price target implies and upside of 14% for MU shares.Sidney Ho of Deutsche Bank, concurs in the bullish assessment, writing, “We have confidence that the company's August quarter will be the trough this cycle.” Ho raised his price target by 22%, to $55, indicating a potential 26% upside.The rest of Wall Street largely buys into what the chip giant has to offer, as TipRanks analytics reveal MU as a Buy. Out of 22 analysts polled in the last 3 months, 13 are bullish on Micron stock while 6 remain neutral, and 3 are bearish. (See MU'S price targets and analyst ratings on TipRanks)
The Dow Jones Industrial Average may have ended on a positive note last week. However, Wednesday's 800-point drop was perhaps the first major warning of a pending recession. Naturally, semiconductor firms like Micron Technology (NASDAQ:MU), which depend on a robust economy, were under a spotlight. Year-to-date, Micron stock is up over 40%, but many investors fear that could change in a hurry.Source: Charles Knowles / Shutterstock.com For one thing, the already ugly U.S.-China trade war has escalated in recent weeks. From harsh rhetoric ramping toward accusations of currency manipulation, no resolution to this conflict appears in sight. That's despite the fact that both sides have demonstrated evidence of economic pain. For instance, key metrics, such as the producer price index, have turned negative on China.However, new reports indicate that President Donald Trump's aggressive prosecution against Chinese malfeasance has also hurt American businesses. One confirming point is that consumers are paying more for products or parts imported from China. Ultimately, that doesn't do the MU stock price any favors as 57% of Micron's total revenue comes from China.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs a result, conservative investors may want to sit out Micron stock until the smoke clears. But for the risk-tolerant, shares might fare better than many other companies. Here are three reasons why: Trump Is a Long-Term Benefit for Micron StockUndoubtedly, Trump has a tough challenge for the upcoming 2020 election. Primarily, he must hope and pray that the economy rebounds under his watch. Otherwise, he might pay for it with a Democratic victory a little more than a year from now. * 10 Cheap Dividend Stocks to Load Up On Unlike prior administrations, the voting public will show zero mercy for Trump. That's because a major reason why we're having economic troubles is due to the trade war. Even if his handling of this conflict is justified -- and there are reasons to believe this is the case -- voters will nevertheless blame Trump.That said, the MU stock price is one of the direct beneficiaries of Trump's no-nonsense economic policy.Micron knows full well the depths the Chinese will go to steal intellectual property. They were the victims of a complex heist previously only known to Hollywood scripts. Of course, such an environment negatively impacts Micron stock. It's distracting enough that the company competes in a cutthroat market. Adding government-endorsed espionage takes it to another dimension.Fortunately, MU executives don't have to dwell on this scenario any longer. Trump sent a very harsh signal to China that their misconduct won't be tolerated. Given the economic damage on both sides, I doubt the Chinese are eager to repeat their offenses. 5G Will Support the MU Stock Price Over the Long RunAs I mentioned up top, around 57% of Micron's total revenue comes through Chinese channels. That's fine if we have a robust relationship with the world's second-biggest economy. But in this juncture, it's almost catastrophic.So, why hasn't the MU stock price absolutely plummeted in the wake of the Dow Jones slaughter? In my opinion, a big reason why stakeholders have remained positive is the 5G rollout. This is a game-changer for the wireless industry and Micron plays a pivotal role.As you know, the company specializes in memory chips. A broader shift to cloud computing, data centers and the digitalization of everything has previously bolstered Micron stock. As an aside, these industries will continue growing despite their present weakness. This dynamic should help mitigate volatility associated with the trade war.More importantly, Micron is busy developing next-generation chips that feature a substantial boost in memory capacity. Further, these chips will play an integral role in future smartphones, including foldable phones.You can also expect government support for our big tech industries. Sure, federal oversight agencies aren't too impressed with this sector right now. However, when we're locked into a tech cold war, it just doesn't make sense for our government to punish our best and brightest. Micron Stock Is Built Like a TankThe final silver lining in this trade war mess is the financials underlining Micron stock. Here's the obvious reality about the coming downturn (if we have one): Everyone will suffer.Initially, that sounds like a terrible thing for MU stock. As a tech firm and a "risk on" name, it's very sensitive to market pressures. However, Micron is built like a tank relative to other sector players.For example, the company has a very strong balance sheet that got even stronger with debt paydowns. Its cash position has stayed stable over the last several quarters, holding $6.7 billion at last count. Additionally, Micron enjoys profitability margins that exceed most other semiconductor names.In other words, if the markets encounter turbulence, MU can weather storms that other rivals can't. That positions the company to take advantage once the turmoil subsides. Further, with high demand for 5G and other tech, Micron can mitigate some of the risks associated with China.Having said all this, Micron stock is not for the faint of heart. But if you're looking for a tech discount, this might fit the bill.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post 3 Reasons to Believe in Micron Stock Despite Market Fears appeared first on InvestorPlace.
Investing.com - Micron (NASDAQ:MU) led semiconductor stocks higher on Monday, underpinning a broader rally in tech, as Washington decided to extended a reprieve given to Huawei that allowed the Chinese telecom to continue to do business with U.S. companies.
Micron Technology, Inc. (NASDAQ:MU) saw a significant share price rise of over 20% in the past couple of months on the...
Shares of Micron (NASDAQ:MU) have been volatile, which is no surprise given the current landscape of the stock market right now. Take virtually any news headline and it's easy to see its impact on the stock market.Source: Shutterstock The yield curve, slowing national economies like Germany, the market and currency implosion in Argentina and of course, the trade war, can all impact stocks. But the trade war is the big one for Micron stock because the conflict has a huge impact on semiconductor companies.In the case of MU, sometimes the impact of the conflict is direct and other times it's indirect. But if MU's semi, memory and chip peers -- like Applied Materials (NASDAQ:AMAT), Lam Research (NASDAQ:LRCX), Advanced Micro Devices (NASDAQ:AMD) and Western Digital (NASDAQ:WDC) -- are struggling, there's a good chance that MU stock will struggle too.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMoreover, supply/demand issues have weighed on memory manufacturers like MU as well. That's why we've slowly seen estimates for MU's top and bottom lines dwindle over the last nine months. * 10 Cheap Dividend Stocks to Load Up On There has been optimism that MU and its peers have reached a bottom. If that's the case, it would be quite a powerful positive catalyst for MU stock price. Valuing Micron StockThe one thing investors have always pounded the table on when it comes to MU is its low valuation. But that low valuation is there for a reason; specifically, MU operates in a boom-bust business cycle. When the climate is right, its sales and earnings surge. But when demand dries up or supply builds too much (or both), its earnings and revenue are hammered.No one wants to pay an average price=earnings multiple for that, let alone a premium. Some analysts, however, have said that if Micron stock traded with the same multiple as the S&P 500, then MU stock price would be much higher than it is.But modeling a price target on a stock based on the assumption that investors will dramatically raise its valuation is a fool's game. That doesn't happen often and when it does come to fruition, there's no way of knowing what the final valuation will be. Investors really need to analyze each stock based on its own merit and history.In Micron's case, it has a low valuation, and that probably won't change unless a modification of its underlying business alters its outlook. Analysts, on average, expect MU to generate earnings per share of $6.22 this year, leaving Micron valued at 6.75 times the average EPS estimate.However, the average EPS estimate for 2020 is just $2.50. If the average estimates prove correct, MU's EPS will sink 60% year-over-year in 2020, and MU stock is trading at 16.8 times its 2020 EPS. Moreover, the average estimates call for MU's sales to fall 24% this year and another 15% in 2020.The average estimates for 2020 may be too bearish, but that emphasizes exactly what we're talking about: Micron's business is too volatile to command a higher valuation. Trading MU Stock Click to EnlargeThe wild swings of MU's earnings and revenue are too much for many investors. For those who do want to buy Micron stock, perhaps it's best to accumulate it when the news has worsened considerably and sell the shares when it seems like blue skies for MU.On Tuesday, MU stock fired higher, briefly eclipsing $45. However, the prior resistance zone between $44 and $45 held it in check. It didn't help that Micron's 38.2% retracement level is near $44 as well, while its declining 20-day moving average was $43.11.We have been highlighting this resistance zone for months now, and there's currently a lot of resistance in this area.The rhetoric about MU is improving, but investors are still pretty cautious on the name. Luckily for the owners of Micron stock, the charts have somewhat definitive levels.Bulls either need to see Micron stock price overcome its resistance or get cheaper before buying Micron stock. Bulls who are waiting for the shares to overcome resistance should look for a close north of the $44-$45 zone. If that happens, MU stock can reach its July highs near $49.Aggressive bulls waiting for MU to get cheaper may feel confident near $41. There, MU stock price will be near the 50% retracement level and the 50-day moving average, which is trending higher. Conservative bulls may wait for a correction down into the $39 area. There it will encounter prior support from July, as well as the 200-day moving average. Further, the 61.8% retracement level near $38 should help boost MU stock.In either scenario, buyers need to use extreme caution below $38. If this level give way, MU can decline into the low- to mid-$30s.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post A Low-Risk Way to Trade Micron Stock appeared first on InvestorPlace.
Do you hear that? That's the faint sound of the music finally starting to play again for Micron (NASDAQ:MU). For the past several quarters, the music has stopped playing for the chipmaker, and Micron stock has dropped as a result.Source: Shutterstock Specifically, demand in the company's core memory markets has dried up, while supply levels have soared. The combination of falling demand and rising supply has created an adverse operating environment for the chipmaker, wherein revenues, margins, and profits have all plummeted. This has led to MU stock dropping from $60 in June 2018, to $30 by June 2019.But, the music is finally starting to play again. Multiple signs have emerged recently that imply that global economic conditions have improved gradually over the past few months. In turn, business confidence is coming back, and semiconductor demand is starting to recover. This demand recovery is eating away the market's supply glut, and inventory levels are starting to moderate.InvestorPlace - Stock Market News, Stock Advice & Trading TipsNet net, Micron appears to be in the beginning stages of a big recovery, defined by renewed demand, moderating supply, and rising revenues, margins, and profits.Because of this, now looks like a good time to finally buy back into Micron stock. As I've stated many times before, MU is the sort of stock you want to buy when the music is playing, and sell before the music stops playing. Right now, the music is starting to play again, meaning it's time to get bullish. * 10 Stocks Under $5 to Buy for Fall Micron's Fundamentals Are RecoveringMicron's fundamentals, which deteriorated meaningfully over the past several quarters, are finally starting to recover.Specifically, despite noise about the trade war and yield curve inversion, the data suggests that the global economy slowed down in early 2019, but is now finally starting to stabilize. Just look at the OECD's global Composite Leading Indicator (CLI).It has dropped every month over the past twelve months. But, the sequential declines have moderated significantly over the past few months, and the broad takeaway is that global growth - after several months of slowing - is finally starting to stabilize. Forthcoming rate cuts from the Fed should further help global economic growth trends improve.Improving global economic growth trends have led to reinvigorated semiconductor market demand. Micron said in a recent conference call with investors that demand is starting to return in a meaningful way, driven by renewed demand in the cloud and graphics segments. On that same call, management said that days of inventory outstanding, which hit a record-high 143 last quarter, is set to come down in the fourth quarter, mostly due to this renewed demand.In other words, Micron confirmed that the company's fundamentals are finally starting to recover. Usually, such recoveries last several years. As such, it appears that Micron is in the first inning of a multi-year recovery. That recovery should get (and keep) Micron stock back on a winning trajectory. Micron Stock and Long Term TrendsIn the long term, MU stock looks good, mostly because it's supported by favorable secular trends.Specifically, Micron makes chips that serve as the building blocks for all of tomorrow's most important markets. This includes end-markets like 5G, IoT, AI, automation, data, so on and so forth. Thus, in the long run, there are sufficient secular demand drivers here to keep Micron's revenue growth in solidly positive territory for the foreseeable future.Further, Micron's margins have been on a long term uptrend since 2000. Since then, Micron's gross and operating margins have made consistently higher highs and higher lows. There's no reason to believe that this uptrend won't continue for the foreseeable future, given that Micron is supported by favorable demand drivers.As such, in the long run, Micron's revenues, margins, and profits should all run higher, meaning that this recent downturn is really just "noise" in the big picture. It's noise worth paying attention to. MU stock dipped 50% at one point. But, it's also noise worth buying into once the fundamentals start to improve.That's exactly where we are today. Bottom Line on Micron StockWhen it comes to Micron stock, buy when the music is playing, and sell when the music stops playing. From June 2018 to June 2019, no music was playing. But, in July 2019, the music started playing again, as signs were emerging that demand was coming back into the picture at the same time that supply levels were moderating.Micron management has confirmed that these rising-demand, moderating-supply trends have persisted into August. Thus, there's reason to believe that the music will keep playing for the foreseeable future. So long as that music keeps playing, MU stock should continue to bounce back.As of this writing, Luke Lango did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks Under $5 to Buy for Fall * 5 Stocks to Avoid Amid the Ongoing Trade War * 7 5G Stocks to Buy Now for the Future The post Fundamentals and Trends Say Micron Stock Finally Is Worth the Risk appeared first on InvestorPlace.
On Friday, chipmakers Nvidia and Applied Materials will be in focus following their quarterly results that were released Thursday evening.