Micron Technology (MU) — For the remainder of this week, the Trade of the Day will focus on my favorite long-term, high-quality investments. This memory chipmaker has been on the Trade of the Day buy list since March 2013, when I recommended it near $10. Since then, the stock has been one of our best performers, surpassing earnings estimates and my steadily increasing price objectives.
Credit Suisse (CS
) named Micron one of its top picks for 2014. On Sept. 25, its analysts reiterated their “outperform” rating and 12-month target of $50, citing in-line fiscal fourth-quarter revenue and earnings and first-quarter guidance that was above estimates and “significantly better than feared.” As such, they increased their fiscal 2015 EPS estimate from $3.48 to $3.62, and initiated fiscal 2016 EPS of $4.46.
This year, MU ran from the low $20s and “double-topped” in July and late September at exactly $34.85. After hitting the high in July, it consolidated in a bullish “W.”
The recent market sell-off has hit semiconductor stocks hard and drove MU down over 20% from its Sept. 29 high. On Wednesday, it rallied from a low of $26.32 on heavy volume. It closed higher on the day, but missed a key reversal day (KRD) because it did not close higher than Tuesday’s high.
Buy MU at $28 or lower with a trading target of $32 and long-term objective of $50.
