Micron. Right On Time.

APRIL 23, 2021

From our crew to You. Thank You for taking the time to share Us a Like. It matters.

Financial information often has a very short shelf life. Example. Buy and sell opportunities flash and then vanish. Anyone familiar with STOCKjAW knows we prefer comprehensive coverage. Why? Hope is no substitute for knowing. Yet, timely calls matter. Here’s “Micron. Right on Time.”

Savvy market participation includes knowing when to trade and when to bet long. Trading and investing go hand-in-hand, like fundamental and technical analysis. Really it’s what, when, how, and for how much. Think Micron(MU) now. We are.

Valuation–or how much you pay–matters. We know that stocks are valued against how much the underlying company earns, per share. That’s the P/E, or “Price-to-Earnings,” the multiple. MU now sells for a trailing P/E of 30, and a 15.5 forward. Compare that to the S&P 500’s 42 trailing and 23.4 forward. What does that mean?

The above comparison means that Micron sells at a 28% discount to the market on a trailing P/E basis. It means that MU sells at a 33.7% discount to the market looking forward.

Micron also sports a jaw-dropping Price-to-Earnings-Growth rate of 0.5. You’ll recall that a PEG of 1.0 is considered cheap, while a 2.0 expensive. You’ll also recall that dividend payers, such as VZ, T, or any utility or MLP, aren’t measured by that PEG rule. The PEG rule is for growth. Below is the chips to chips valuation shootout. Keep in mind that Intel’s in turnaround mode and absolutely surrounded by questions, if not doubts. Meanwhile, Advanced Micro Devices(AMD) is best of breed, a killer, and also worth the money, despites it’s weakness YTD. As we write it’s up 4.46% from Thursday’s close.

-Comparisons-

The fundamental health of any company is key. Micron’s fundamental position is very strong. Short story–MU’s not suffering from fundamental flaws. Timeliness is our point here. This market’s offering MU at an attractive price. If today’s rally fades, Micron’s price only becomes more attractive. Why? Nothing fundamental has changed. Micron’s the same company it was on Friday, only cheaper. We’re interested in MU anytime it drops below $90. It’s trading at $86 now. As we write it sits at $86.03 exactly. Micron’s ideally positioned to continue profiting from the ongoing and market-wide shortage of semiconductors.

The production of everything from autos, industrial equipment–such as programable logic controllers, and every computing consumer device, is currently being slowed by this semiconductor shortage. Behind it all lies a shortage of the capital equipment required to produce chips. Evidence of said is visible in the recent out-performance of capital equipment makers such as ASML, AMAT, and LRCX.

-The Technicals-

MU’s price-action has violated both it’s 21 and 50 day simple moving averages(SMA), seen in red and yellow respectively. See chart point #1. Nonetheless, the price-action is enjoying support at the bottom of its’ Bollinger Band envelop, displayed in blue. In the five distinct dips displayed here, the B. Band’s bottom band has tidily contained each price drop, most notably in the second dip from the right, a decline that bottomed at $81.14.

Point #2. shows the current stochastic oscillator reading. The oscillator is a momentum indicator tool. The value line seen in yellow is currently displaying an upward bounce, a second in fact. Additionally, it’s crossing both smoothing SMAs, seen in red and blue. Taken in tandem, the two signals indicate a potentially strong upward trend shift.

The additional circled area, left, demonstrates a triple bounce, followed by such a strong trend, one that ran up into the overbought range–any reading above 75. Point #3. The Moving Average Convergence/Divergence(MACD) is stone bearish. The value line seen in blue, is not only yet dropping, but even more steeply then the signal line, red. “Oops” you may be thinking. Perhaps, yet technical signals are routinely mixed, more often then not actually. How is such resolved? At times conflicting signals can not be resolved. Yet, adding it all up can create critical mass. Technical analysis remains a valuable judgment call. In our view MU’s current chart displays greater strength then weakness, including a bullish trend shift. And?

If MU’s current rally fades, near-term support is not far below–most notably just above $81, its’ near-term low. In our view a move above $90 is likely, possibly as soon as next week. If so, a further climb above $94 is reasonable to wait for. A buy at $87 with a sell at $95 is a 10% move. Above $95 resistance grows much more significant. We plan to sell our full position by then. We feel, at this point, that $95 is MU’s near-term top.

MU’s offering what we feel is a very attractive entry point now, for either a swing trade or the building of a core position. Is Micron a good trade? It’s a great trade, or a longer-term hold. Micron’s right on time. Their future is bright. MU’s offering strength of industry positioning, overall health, a seriously competitive valuation, and a market-wide chip shortage as an ongoing catalyst.

As we all realize, semiconductors lie at the heart of the technological mega-trend. They process, power, and store, everything tech–the digital revolution, 5G, the IOT, and the mobility of everything from hand-helds to autonomous vehicles. In our view, if Micron doesn’t continue its’ current up bounce, it will, soon. We bought more today thank you. Hey and thanks for excusing our typos.

As always good luck and savvy investing.

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Additional resources:

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