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Anatomy of Success: Micron (MU)

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The proven Zacks Rank is an exceptional stock-picking strategy for both beginning and experienced investors. The system emphasizes earnings estimates and estimate revisions, highlighting a variety of stocks—including those with varying market caps and from many different industries—that are displaying the right characteristics to beat the market.

When a company earns the coveted Zacks Rank #1 (Strong Buy), it is poised to provide superior returns over the next one to three months. But achieving this top rank is no easy task. Of the thousands of companies tracked by Zacks, only about 5% earn this designation.

In the story below, you will learn about one particular company that helped show the strength of the Zacks Rank. If investors had followed our ranking system when it flagged this rapidly-growing semiconductor powerhouse, they would have witnessed massive profits.

Micron Technology, Inc. (MU - Free Report)

Micron is one of the world's leading providers of advanced semiconductor memory solutions. Through its worldwide operations, Micron manufactures and markets DRAMs, NAND flash memory, CMOS image sensors, other semiconductor components, and memory modules for use in leading-edge computing, consumer, networking, and mobile products.

MU was a consistent member of the Zacks Rank #1 (Strong Buy) list throughout 2017, first earning the rank on March 10. The stock earned this designation just a few weeks before it reported an exceptional quarter, posting better-than-expected adjusted earnings and total revenue. Net sales were up more than 58% year over year.

Micron would hold this #1 (Strong Buy) position for a staggering 11 weeks. It would then join the top-rank list again on July 7. By this point, the stock was already up nearly 20% from when it first earned the #1 (Strong Buy) designation.

Micron’s second Zacks Rank #1 (Strong Buy) of 2017 came shortly after the release of its new earnings report. Once again, the semiconductor crushed expectations and witnessed shocking year-over-year growth. Adjusted earnings per share of $1.62 were well ahead of the Zacks Consensus Estimate of $1.49 and a vast improvement from the $0.08 loss reported in the year-ago period. Total revenues came in at $5.57 billion, up more than 92 on year over year and ahead of our consensus estimate of $5.40 billion.

This time around, Micron would hold on to its #1 (Strong Buy) for 21 weeks, blowing past another remarkable earnings announcement and generating serious momentum. The company would never dip below a #3 (Hold), and the stock would once again earn the top rank on Dec. 12. Micron shares gained more than 46% between its second and third #1 (Strong Buy) designations of the year.

Once again, Micron’s addition to the top-rank list occurred on the back of a strong earnings report. The company posted adjusted earnings of $2.45 per share. That crushed the Zacks Consensus Estimate of $2.20. Meanwhile, quarterly revenues were $6.80 billion, beating our consensus estimate of $6.39 billion and improving 71% year over year.

The below chart demonstrates the price performance for MU and 12-month forward looking EPS estimate (in red), starting from the time the stock first earned a Zacks Rank #1 (Strong Buy).

 

As we can see, MU was a huge winner for those that followed the Zacks Rank. The stock is currently up more than 125% since earning a Zacks Rank #1 (Strong Buy) last year. Investors should know that our model is the simplest way to identify elite stocks poised to beat the market on a consistent basis.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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