Micron Technology, Inc (NASDAQ:MU) direct random access memory (DRAM) chips as well as flash memory chip (NAND and NOR) for electronic devices.
This used to be a pretty cyclical market that waxed and waned with consumer cycles for PCs, laptops and digital devices like iPods and cameras. And even when demand increased, there were plenty of chipmakers that could provide the memory chips, so pricing was a bit commoditized and margins were thin.
But those days are gone, and the days that are replacing them portend big things for MU.
Conditions Look Good for Micron Stock
First, the variety of electronic devices that are using flash memory has significantly expanded.
Now, mobile phones, self-driving cars, cloud computing, smart buildings and all the other technologies that we so easily embrace these days work better with flash memory than traditional disk memory.
What’s more, as HP Inc’s (NYSE:HPQ) recent earnings show, PCs are in a growth trend, and many of the new PCs rolling off the line are switching out their disk memories for flash memories.
Flash memory is also smaller, faster and more stable than most disk memory, so its the first choice for any technology that needs to move or where speed is important. And that would be just about all the new technology rolling out at this point.
The demand is so high at this point, that many are comparing this memory shift to the shift that happened to graphics cards and launched Nvidia Corporation (NASDAQ:NVDA) onto its epic long-term bull market journey.
These tipping points in technology come to sectors once every decade or so. And now it is start to seem like hard drive memory is about to make its exit on the tech scene.
Second, MU is in a much better financial position as this new super cycle starts.
That means it will be able run with the big dogs as demand increases. It has the resources to build a next generation fabrication plant and still have enough in the bank for any potential bumps along the path to prosperity.
Third, its technicals are looking as good as its fundamentals. Micron stock is ticking all the boxes.
MU had been in a consolidation pattern since late November until it broke out with gusto this month. Any dips have been met with buyers and it has been ready to pop for quite a while.
Fundamentally, MU stock us up about 30% since the February selloff, easily outperforming all the indexes and most other stocks in the market, including its competitors like Intel Corporation (NASDAQ:INTC) and Western Digital Corp (NASDAQ:WDC).
Over the past 12 months it has lapped the competition, up over 110% in the past 12 months. That’s quite a move for stock with a $64 billion current market cap. But it shows that there’s far more here than a simple cyclical upturn.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.