Micron Technology (MU)

Got stopped out of the stock a couple of months ago. Trading quite cheap at 6X forward earnings. The problem is that it has a lot of exposure to China, which is probably hitting the stock a bit. For the time being he would stay away. From a technical perspective, it doesn’t look too great with the 15, 100 and 200 day moving averages falling quite rapidly.

The memory market is still very volatile. The margins have come under pressure. Stock had a great run for a couple of years, but is now starting to face oversupply and margin pressures again. He would be inclined to step back and look at something else that has longer-term growth in the industry such as a Qualcomm (QCOM-Q) communication chips or to Intel (INTC-Q) if you really want to be in the chip market.

This is not doing well and has pulled back. It has broken the positive long-term trend, and is now just consolidating. Semiconductors tend to be indicative of the broader economy, which could suggest something from a broader macro perspective. On seasonality, he has a bit of a blip from June through to September, where it tends to outperform the market, but whether or not it has reached the bottom it is hard to say. It broke support at around $26 and the moving averages are trending lower.

The whole semiconductor area is interesting. This one has been an “also-ran” consistently. It is an area where there has been some takeover activity. There is a slowdown in CPU sales. Intel is fighting very aggressively to maintain market share, and this company is going to have to match that kind of pricing. It is a cyclical business, and there are a lot of reasons to believe we are closer to the top of the market cycle, not the bottom.

One of the leading producers of memory chips, a brutal industry that is quite cyclical. There is a lot of competition, so this is really a trading stock. You Buy when things look awful and Sell when things look really good. Has had a huge run over the last couple of years and the trade is done. Wouldn’t own at these levels.

A semiconductor stock and this sector is on fire. Has broken through its all-time highs. The problem with the sector is that its period of seasonal strength, from October to January of each year, is already past. Watch very closely for an opportunity to take profits.

Has been a little bit disappointing as of late. Valuation is still very cheap, but the technical aspects in terms of its recent movement have been a bit disappointing. It is right at its support level, and he will watch to see what it does over the next several months.

This is back to what he calls an EBV+3 which is $26.60. He has a model price of $57, a 113% upside, which is not uncommon. A very cyclical stock. This is a good trading position and would be a good entry point with a very tight Stop.

This is one of several of semiconductor stories that are not tremendously expensive. The global semiconductor cycle cannot get itself going, so it is not an expensive stock, but the growth outlook was cut recently.

Memory chips. There have been concerns on DRAM prices dropping. But he thinks it is a great buy. He likes it here and thinks the industry will prove itself.

Memory chip market is volatile and the price is extremely volatile, so the margins get hit up and down all the time. This has not been a great growth stock for a long period of time. It is almost a cyclical play. You play it when the product cycle is right, when memory prices are rising and when margins are starting to improve, and then you get out.

Trading at a pretty decent valuation at 9X PE with a decent growth rate, putting the PEG ratio below 1.0. One thing to remember about this stock is that it is quite volatile. You are looking at 1.4 beta. It is going to move around quite a bit, but the valuation is there. As the economy gets better and as the technology cycle continues to move forward, this is a good name to own. As a high beta stock, watch for opportunities to buy and watch for opportunities to sell.

Stock got hit today because word came out that Samsung, not this company, will do most of the DRAM work for Apple. It looks like a massive deal that Apple has put together. Given the value and the run up in the company, he expects the impact will be felt. He would be cautious right now.

Semiconductors are a great sector to watch. Today semiconductors are what copper used to be. When they are performing well, this tells you that people have strong expectations for future growth in the economy. There is a very short inventory cycle in semiconductor companies. When the economy is getting better, their orders tend to be coming quite quickly. The group is acting very, very well. This looks very attractive and is not an expensive stock.

Still likes this. Hit a new 52 week high today. Trading at a pretty decent valuation. PEG ratio is under 1. It still continues to offer value. It’s in a cyclical space. We will continue to see the economy improve and companies like this should do well.