Tech names like Micron Technology (NASDAQ:MU) have staged a spectacular recovery since the March market bottom. Along with the Nasdaq generally, the MU stock rebound is proof positive that the technology sector hasn’t been particularly vulnerable to the ravages of the novel coronavirus.
A number of factors make tech stocks attractive now. These include the progress of the 5G network, the Internet of Things (IoT), self-driving vehicles, and wearables. To those we can add the explosion in the gaming market due to lockdowns and shelter-in-place mandates. Plus, the work-at-home trend has brought cloud computing to the forefront of the tech sector.
Directly or indirectly, Micron should continue to benefit from all of these technological innovations. Even with coronavirus concerns not yet quelled, betting against MU stock now wouldn’t be a wise move.
MU Stock at a Glance
The middle of March marked a short-term bottom for many stocks, and MU fits into that category. Shareholders are still patiently waiting for the stock to reclaim its 52-week high of $61.19.
However, the progress can’t be denied. There were a number of buyable dips along the way as the stock made a series of higher lows and higher highs after March’s big panic. Even with that, though, a compelling argument can still be made that MU stock offers a good value to investors.
The trailing 12-month price-to-earnings ratio, a well-known metric of valuation, comes out to 24.02. That’s fairly reasonable for a technology stock.
Be advised that Micron’s next earnings event is coming up on June 29. It’s perfectly okay to take some risk off the table and re-enter the trade if the share price falls on that day.
The Fed Provides a Tailwind
U.S. Federal Reserve Chairman Jerome Powell didn’t exactly say that he’s going to support the technology sector. However, the Fed’s actions will very likely promote growth for tech companies and their stocks.
Back in March, the Federal Reserve lowered its benchmark interest rate to a rock-bottom range of 0% to 0.25%. That’s unprecedented in U.S. economic history, but it will tend to help businesses as low rates keep borrowing costs down. And tech companies like Micron that generally thrive is this type of business-friendly economic environment.
On June 10, the Fed reiterated its business-friendly commitment when Powell maintained the aforementioned interest rate range. Not only that, but Powell suggested that this rate will be kept near 0% throughout 2021 and 2022.
This should allow businesses to continue buying and upgrading computers. And Micron specializes in supplying memory chips and graphics cards for these computers.
It’s not just businesses, as more students have been doing their schoolwork from home. Once again, they’ll need to buy and upgrade their equipment, and Micron will be ready to provide components for their desktops and laptops.
Setting High Targets
Analysts’ expectations aren’t the be-all and end-all of investing. As an informed investor, you must always conduct your own due diligence and make your own decision before taking a position in any asset.
That being said, analyst price target revisions can have an impact on stock prices. They can give us another reason to believe that our bullish projections are correct.
Wedbush analyst Matt Bryson, for example, recently gave MU stockholders a nice shot in the arm. To be more specific, he raised his price target on the shares from $51 to $55.
Another boost of confidence came from Deutsche Bank analyst Sidney Ho. Along with a rating of “buy,” Ho assigned an ambitious price target of $60 for MU stock.
The Final Word on MU Stock
The aforementioned analysts’ price targets for MU stock are justified as the tech sector should continue to prosper. The trend is still to the upside until there’s a reason to believe otherwise, and for the time being, no such reason exists.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.