Semiconductor manufacturer Micron Technology (MU) makes a host of high-tech products found in computers and mobile devices — mostly in the flash memory space. And as tech investors should know, the biggest cash cow for semiconductor companies has long been the PC business — and a decline in laptop and desktop sales has worked against Micron.
So in 2008 and 2009, Micron underwent a major restructuring and laid off about 15% of its work force in an effort to reverse its fortunes. It also bought flash-memory company Numonyx for about $1.2 billion to improve market share, and teamed up with mega chipmaker Intel (INTC) on a few projects.
These moves resulted in a fantastic 2013 as Micron stabilized its top line and is actually projecting profits for fiscal 2014. Unsurprisingly, MU stock has soared as a result.
But how much upside is there really from here? The company trades at a forward P/E of 13.7 based on estimates for fiscal 2014 earnings — higher than Intel — but doesn’t pay a penny in dividends. Furthermore, the growth next year is being largely driven by acquisitions and partnerships — and while Micron stock has another $3 billion in the bank to make more moves, this isn’t a long-term strategy.
I’d sell this Cinderella stock now and lock in your big gains.