E Superb Valuation, Micron Technology Stock Is Very Attractive

The shares of Micron Technology (MU) have fallen sharply from their eighteen years high at the end of May 2018, but have started to recover in the last three weeks. Micron's stock last price of $36.01 on January 11, is 44.31% down from its 52 weeks high of $64.66 at intraday trade on May 29, 2018, but it is already 26.84% up from its 52 weeks low of $28.39 at intraday trade December 26, 2018. As I see it, the drop in its price creates an excellent opportunity to buy this great company's stock at a very attractive price, mainly due to its superb valuation and high growth prospects.

Micron is the only American major producer of memory chips. 68% of the overall company revenue in the first quarter of fiscal 2019 came from DRAM. Unlike flash memory, DRAM is volatile memory which means that information is lost when power is lost. The DRAM is commonly used in mobile devices, desktop computers, smart televisions, automotive systems, cameras, and much more. Three companies dominate the global DRAM market producing about 96% of the total world production of DRAM. South Korea based Samsung has about 45% of the global output, and the other South Korea based SK Hynix has about 29%, while Micron has about 22% of the world DRAM production.

28% of the overall company revenue in the first quarter of fiscal 2019 came from NAND flash memory; Micron is the third largest NAND manufacturer in the world. Samsung holds a market share of about 35.6%, Western Digital (WDC) has about 14.9% market share, Micron about 13.1%, and SK Hynix 10.8% of the global NAND production. NAND flash memory is non-volatile storage that does not require power to retain data. It is used in devices to which large files are frequently uploaded and replaced. It is found in most modern cell phones as the main and even as the secondary storage, in memory cards, and solid-state drives as computer storage.

Micron's fundamentals are excellent, and its valuation ratios indicate an undervalued stock. Micron's trailing price to earnings is extremely low at 2.97, and its forward P/E is also very low at 5.11. The price to free cash flow ratio is exceptionally low at 4.89, and its price to earnings to growth ratio PEG is also very low at 0.18.

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I am long MU stock.

I have no business relationship in any stock or company mentioned in this article. This article is intended for informational and entertainment use only, and should not be ...

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