Micron Technology (MU)

He thinks semi-conductors are heading down. He would sell this one – especially as the momentum is coming out of this sector. Another 10% drop in the sector overall, could cause another major fall in value.

Tariffs are not a good thing, of course. But more importantly be worried that the chip cycle has turned. There were strong numbers before, but not going forward. Numbers ahead don't look good. Avoid.

It's very cyclical. It has consolidated the space as leader, so there's less competition now. This cycle is not over, but it's trading below its 50-day moving average. If you're a value investor, you could buy it now, but the technicals don't impress him.

It has two things he likes. It has good price momentum and good valuation. Chip makers are meaningfully cheaper than software companies. This is a very cheap company, about 4 times earnings. They have all struggled recently but that is not a reason to give up on them. Hang on to it or take another look at it.

He used to love it until he sold it recently. The problem with it is that the chip business is wildly volatile, and it's hit a bad patch. His FMV shows a 300% upside. Nice balance sheet. But the business it's in is volatile. You can take a
crack at it at $42.

Incredibly volatile, both this stock and the "memory" chip space. If you like semi-conductors, then look at the semis' capital equipment companies. The real money is made by the people who supply the picks and shovels. Now is the not a good time to enter this industry because revenues will be down 10-20% in the quarter. But revenues should be higher in 2019. Look at this space in Q4.

(A Top Pick August 28/17 - Up 12%.) Covered call selling JAN 30 calls. They were called away. More volatility here.

Semi-conductors are seeing a buying signal lately. He thinks tech will continue to be a leader in this inflationary area and likes the earning growth of this company. This is one of the companies than controls market share in the space.

This is a cyclical stock. Over half of its business goes to China. It is at peak earnings. His model price is $196.21, which is a 250% upside, but this stock never trades on its earnings because it is cyclical. He expects the stock to trade over and under his EBB+3 price level which, a year from now, is $82, still much higher than its current price around $60. The stock pays no dividend.

It's done well as it continues to trend higher. It's been a great name. News about them being banned from China worries investors, but in this space this is one of the best stocks. Put a stop loss on it. He likes this.

He bought it back in 2016. When he started researching assisted driving, this company came on his radar. It is a volatile stock, but the valuation is fair with the Price Earnings to Growth ratio running at a cheap 0.22. His target price is $80 in one year. It is a leader in the NAN and DRAM chip markets.

It has been volatile over the years. It's currently on an up cycle which should continue since there's more demand for storage and the Cloud. He doesn't know MU well.

All the tech stocks look expensive for value investors. This has good growth ahead with demand from phones and other devices. He likes semiconductor companies and any portfolio should have some exposure to this space.

He thinks they are ideally positioned for the movement to cloud based storage. Estimates are that global cloud storage has increased by 90% over the past 18 months. They put up a good earnings surprise and are doing well.

Lam or Micron? Semi-conductors have been a good neighbourhood to be in. LAM is much more focused on equipment that makes semis while Micron is focussed on memory chips. With the proliferation of handsets, the demand for memory has been shooting through the roof, so Micron is benefitting big. He prefers Micron, though it's more cyclical than other stocks. Given consolidation in this space, the pricing power has gotten better. It trades at 6x PE like a cyclical. Great job of growing its business.