We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Micron (MU) the Tech Sector's Cheapest Growth Stock?
Read MoreHide Full Article
Micron (MU - Free Report) shares have struggled to generate any positive momentum since the company’s recent earnings announcement, and with new volatility inspiring investors throughout global markets to take their profits from red-hot growth stocks, MU has hit a rare downturn over the past week or so.
But Micron’s earnings report included several encouraging signs, with better-than-expected profits and revenues leading management to thank “secular technology trends” for the company’s remarkable growth. Micron might have suffered some profit taking, but paired with these strong results, the stock’s recent selloff feels like a brand-new opportunity to buy at a discount.
The semiconductor memory giant continues to display attractive growth prospects at a valuation that should make any investor interested. So is Micron now Wall Street’s cheapest growth stock? Let’s take a closer look.
Valuation
Value investors have flocked to MU for years, and the stock frequently sports an “A” grade for Value in our Style Scores system. Part of this has to do with the fact that Micron’s core business, computer and mobile memory, has been commoditized by investors in recent years. For whatever underlying reason, the market’s memory giants are simply not treated like other tech stocks.
This means that the best way to judge Micron’s valuation is by comparing it to other memory companies, including Western Digital (WDC - Free Report) , Seagate (STX - Free Report) , and Toshiba. Each of these companies has expertise in different areas and are not always directly competing, but they all reflect the commoditization of the memory business.
Here’s how Micron’s recent Forward P/E trend compares to this peer group:
As we can see, MU has consistently traded at a slight discount to its peer group throughout 2018. Plus, our current Zacks Consensus Estimates calling for Micron to witness EPS growth of 119% and revenue growth of 43% this fiscal year. Investors will not find that type of expansion elsewhere in this peer group, which really underscores the attractiveness of MU’s current earnings multiple.
Analyst Sentiment
Just two weeks ago, Micron received its most-bullish analyst call ever when Nomura Instinet raised its 12-month price target for the stock to $100 from $55. This projection represented an 83% upside from MU’s most-recent close before the note and remains the highest price target out of the 26 research firms that cover the company.
And Nomura’s bullish sentiment is just a small part of a broader trend of analysts becoming more optimistic about the stock. Within the past 60 days, we have seen nine revisions to Micron’s full-year earnings estimates, with 100% agreement to the upside. The Zack Consensus Estimate for the company’s annual earnings has gained a staggering $1.01 over that timeframe.
This positive estimate revision activity has helped MU earn a Zacks Rank #1 (Strong Buy). We believe the strongest growth and value stocks are those that also sport great Zacks Ranks, and the fact that Micron is displaying a unique combination of all three of these encouraging trends is truly remarkable.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Is Micron (MU) the Tech Sector's Cheapest Growth Stock?
Micron (MU - Free Report) shares have struggled to generate any positive momentum since the company’s recent earnings announcement, and with new volatility inspiring investors throughout global markets to take their profits from red-hot growth stocks, MU has hit a rare downturn over the past week or so.
But Micron’s earnings report included several encouraging signs, with better-than-expected profits and revenues leading management to thank “secular technology trends” for the company’s remarkable growth. Micron might have suffered some profit taking, but paired with these strong results, the stock’s recent selloff feels like a brand-new opportunity to buy at a discount.
The semiconductor memory giant continues to display attractive growth prospects at a valuation that should make any investor interested. So is Micron now Wall Street’s cheapest growth stock? Let’s take a closer look.
Valuation
Value investors have flocked to MU for years, and the stock frequently sports an “A” grade for Value in our Style Scores system. Part of this has to do with the fact that Micron’s core business, computer and mobile memory, has been commoditized by investors in recent years. For whatever underlying reason, the market’s memory giants are simply not treated like other tech stocks.
This means that the best way to judge Micron’s valuation is by comparing it to other memory companies, including Western Digital (WDC - Free Report) , Seagate (STX - Free Report) , and Toshiba. Each of these companies has expertise in different areas and are not always directly competing, but they all reflect the commoditization of the memory business.
Here’s how Micron’s recent Forward P/E trend compares to this peer group:
As we can see, MU has consistently traded at a slight discount to its peer group throughout 2018. Plus, our current Zacks Consensus Estimates calling for Micron to witness EPS growth of 119% and revenue growth of 43% this fiscal year. Investors will not find that type of expansion elsewhere in this peer group, which really underscores the attractiveness of MU’s current earnings multiple.
Analyst Sentiment
Just two weeks ago, Micron received its most-bullish analyst call ever when Nomura Instinet raised its 12-month price target for the stock to $100 from $55. This projection represented an 83% upside from MU’s most-recent close before the note and remains the highest price target out of the 26 research firms that cover the company.
And Nomura’s bullish sentiment is just a small part of a broader trend of analysts becoming more optimistic about the stock. Within the past 60 days, we have seen nine revisions to Micron’s full-year earnings estimates, with 100% agreement to the upside. The Zack Consensus Estimate for the company’s annual earnings has gained a staggering $1.01 over that timeframe.
This positive estimate revision activity has helped MU earn a Zacks Rank #1 (Strong Buy). We believe the strongest growth and value stocks are those that also sport great Zacks Ranks, and the fact that Micron is displaying a unique combination of all three of these encouraging trends is truly remarkable.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>