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.
