NEW BULLISH Plays
Micron Technology - MU - close: 34.02 change: +0.43
Stop Loss: 31.75
Target(s): To Be Determined
Current Gain/Loss: unopened
Entry on July -- at $--.--
Listed on July 15, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 31 million
New Positions: Yes, see below
Why We Like It:
The group of "old tech" stocks have been outperforming the market. Names like Microsoft (MSFT) and Intel (INTC) and Micron (MU) are seeing a lot of interest, especially has PC sales come in a lot better than expected. There appears to be a revival of the PC at least from business clients. One thing all of those PCs need is memory.
Micron Technology describes themselves as a global leader in advanced semiconductor systems. Micron's broad portfolio of high-performance memory technologiesâ€”including DRAM, NAND and NOR Flashâ€”is the basis for solid state drives, modules, multichip packages and other system solutions. Backed by more than 35 years of technology leadership, Micron's memory solutions enable the world's most innovative computing, consumer, enterprise storage, networking, mobile, embedded and automotive applications.
DRAM prices have been rising and that's good news for MU. The memory making industry has changed significantly in the last few years. Instead of multiple firms all beating themselves up on pricing the DRAM market is down to just three big companies. The major players are Samsung, Hynix, and Micron.
MU reported earnings back on June 23rd. Analysts were expecting a profit of 70 cents a share on revenues of $3.88 billion. MU delivered 79 cents a share and revenues rose +71.8% to $3.98 billion.
The better than expected results has sparked some analyst upgrades and new price targets in the $38.00 to $50.00 range. MU is considered too cheap by some analysts. They're currently trading at just 10.5 times forward earnings. The broader market is trading for about 15.5 times. Shares of MU have been playing catch up the trend will likely continue.
After the closing bell tonight Intel reported earnings and beat analysts estimates thanks to better than expected demand for business computers. The mobile phone and tablet revolution has cannibalized PC sales for years. According to Intel tonight it looks like PC sales have stabilized and the "worst is over". That should be good news for companies like Micron.
Shares of MU are already in an up trend. The stock looks poised to breakout past its early July highs near $34.50. Tonight we're suggesting a trigger to launch bullish positions at $34.60, which would be a new twelve-year high for the stock.
Trigger @ $34.60
Suggested Position: buy MU stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the Oct $35 call (MU141018C35) current ask $2.36
Option Format: symbol-year-month-day-call-strike