Of the hot-trending investment sectors, technology was a major concern in the wake of Donald Trump’s election. The markets had a dim view on the President-elect’s hard-line stance towards globalization. Perhaps it also had something to do with the fact that tech tends to be immigrant friendly, and thus, globalist by default. Either way, the benchmark exchange-traded fund Technology SPDR (ETF) (NYSEARCA:XLK) fell apart the day after the election.
Although that didn’t bode well for Micron Technology, Inc. (NASDAQ:MU) at the time, MU stock made a comparatively quick recovery. It actually ended the month of November up 15% — a rarity among its broader peers. For example, Qualcomm, Inc. (NASDAQ:QCOM) effectively went sideways, while Intel Corporation (NASDAQ:INTC) fell a bit short. But with the passage of time — and maybe some grief counseling — the tech sector appears to be off to the races.
Even without the benefit of detailed technical analysis, anyone can see that momentum is on their side. The XLK is steadily building gains, while the previously lauded Financial Select Sector SPDR Fund (NYSEARCA:XLF) has hit a roadblock since early December.
And within tech, I believe MU stock has the best chance of carrying their bullishness well into this new year.
MU Stock Has Been a Contrarian’s Dream
Off the top, I’ll admit that I’m biased. Micron stock has been very good to me from an analytical perspective.
On March 29 of last year, I stated that MU stock had a great opportunity to come back from the dead. Primarily arguing in favor of the joint Micron-Intel memory chip innovation 3D XPoint, MU simply appeared excessively undervalued. This was also evident when examining certain financial strengths. Consequently, MU stock soared 28% three months later.
Fast forward to Dec. 16 — by then, Micron stock was worth a firm “Jackson.” The market value was also nearly twice what it was when I wrote about it that spring.
That put me in an awkward situation. I loved the potential of MU stock, but it was already realized. Do I then insist on my bullishness, or do I call it a day? After all, two-baggers aren’t exactly common, especially in such a short time frame.
Decisions to bolster its infrastructure, and research and development, while cutting down on overhead costs demonstrated serious intent. I’m sure “The Apprentice” star would agree — these are the attributes that will make Micron stock great again!
You know what? The wager paid off. Even if you came late to the game, MU stock still gave you an 11% profit in less than a month.
Doubling Down on Micron Stock
At this juncture, I’m going to go for the hat trick. A year ago, you would have had trouble finding an analyst that would touch Micron stock with a ten-foot pole. Now, the analyst recommendation rankings are firmly on the buy side. Additionally, two investment research firms upgraded their assessment on MU stock last month.
Even InvestorPlace feature writer James Brumley — with whom I’ve been on the opposite side of the fence on a recent series of stocks — agrees, and quite vehemently. He called Micron stock a screaming buy, which is quite an endorsement. This guy is a very tough customer. In fact, I just labeled him half-jokingly as the coroner of Groupon Inc (NASDAQ:GRPN). So if he’s optimistic about a company, it grabs my attention.
Of course, I’m not pitching an idea on the basis of reputation alone. Brumley raises an extremely valid point — the advanced memory chip market that upended Micron stock in 2015 is now responsible for its revival. A few years ago, there was overproduction of NAND and DRAM memory, killing Micron’s profitability margins. Now, the opposite is true. And industry experts forecast that demand will actually outpace supply later this year.
Naturally, that’s a powerful tailwind for MU stock. Combined with the company’s own efforts in making the most out of its opportunities, I don’t see the bearish argument other than the usual “markets are always risky” disclaimer. Micron stock is well positioned, giving investors another shot at robust profits.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.