Guys
I know a few others hold this stock and whilst I have mentioned it in my portfolio reviews having added to my stake throughout this year, I have resisted banging the table on this one.
With the ER coming on Tuesday, it might be worth keeping a closer eye on though.
Just looking at the metrics, it seems a classic Saul method stock. It has very fast growth in revenues and earnings, is a very well run business that is in a demand sweet spot and in the technology space.
It has a P/E of 16.62 and a forward P/E of 8.78, a price to sales of 2.3, TTM revenue growth of 36% (accelerating to 92% in the latest Q), earnings growth of 580% and a PEG of 0.02.
http://www.nasdaq.com/symbol/mu
https://seekingalpha.com/symbol/MU/key-data
The reason why this is not being credited with a P/E of 60+ etc is because it is perceived as operating in a cyclical industry that is commodity in nature.
This is what I had to share back in March…
http://discussion.fool.com/hi-paul-ok-so-this-is-what-i-posted-a…
Since then the results and guidance have been spectacular:-
https://seekingalpha.com/pr/16876458-micron-technology-inc-r…
… and here are the notes from the recent Citi event…
https://seekingalpha.com/article/4104452-micron-technologys-…
Whilst I haven’t fallen for the end of the cycle theory, I do think that: looking at the trends the pricing cycle is smoothing out and on an upward trend, Micron is less commoditised than ever and is in a stronger competitive position than at any previous point and that the demand structures for its products exploding in ways never seen before (IOT, embedded solutions etc).
The 4 best writers covering the stock on Seeking Alpha are: Electric Phred, Joe Albano, Brian Gilmartin and Bill Tidwell.
Here are 2 recent instructive reviews of the current push/pull pressures between buyers and sellers.
https://seekingalpha.com/news/3296541-global-dram-bit-demand…
https://seekingalpha.com/article/4108869-micron-will-likely-…
https://seekingalpha.com/article/4109022-micron-earnings-pre…
The many comments are interesting. Many focus on the “it’s different this time” vs “it’s not different this time” debate. However there are some really interesting perspectives about just how disruptive and embedded the Micron advantage is, for example:
"Brian, thanks for a well balanced article. All the bull and bear cases are mentioned in your article and previous comments. I will not repeat here. But I like to point out the automata processor and the 3DXpoint. Automata processor resolves the bottleneck when processors retrieve data from memory. Simply put, MU has a new processor that is memory based that can do computation on the memory cells. This will quickly render NVDA GPU AI application obsolete. So what PE is reasonable for the AI leader stock? Currently NVDA is about PE 40. In this measure, with MU earnings be $8-$10, its price can be as high as $320-$400. Now back to 3DXPOINT, Samsung has no competing technology. Why would Samsung or Hynix add capacity that they know will be obsolete in a couple years? Until they can figure out a competitive strategy, it is safer to generate cash. So my core share holding which was bought below $10 will not be sold before I believe my thesis is wrong. Having said that, I sold most of my MU call positions last Friday when stock at $36.10. Since I already sit in huge pile of profit, i like to play it safe. If the stock dip before/after Earnings, I will happily buy more call options. Fundamental is for long term. Option trading for short term. "
Also Micron seems confirmed as an iPhone 8 Supplier…
"Actually, Micron is in the iPhone 8 breakdown.
“The iPhone 8 Plus A1897 model we are examining initially is confirmed to contain the A11 Bionic AP with a die mark TMHS09. The A11 is a Package on Package (PoP) with the Micron MT53D384M64D4NY 3GB Mobile LPDDR4 SDRAM” http://www.techinsights.com/about-techinsights/overview/blog…
For anyone in Micron, next week could be very interesting. Last time it pulled back 20-25% then recovered and moved ahead (I added on the dip).
For anyone not in Micron but buying into the Nvidia story, the server boom, the cloud data storage phenomenon, IoT, Apple iPhone 8 or AI, then again I think it is worth keeping an eye on.
Cheers
Ant