We recently published a list of Jim Cramer Says Buy These 5 Industrial Stocks Before Rate Cuts — And 5 Other Stocks He’s Talking About. Since Micron Technology Inc (NASDAQ:MU) ranks 1st on the list, it deserves a deeper look.
Jim Cramer said in a latest program on CNBC that the NASDAQ has become an “annoying source of funds” for other indexes as mutual funds pull out of tech and growth stocks that would not benefit from rate cuts and funnel these funds into the companies that can “super-charge” their earnings amid the expected rate cuts in September.
Cramer said that the decline of tech stocks could be “painful” for many because while these companies do not benefit from rate cuts, their earnings are still strong. Cramer said there are two kinds of companies that will benefit from rate cuts: the ones with cyclical businesses that thrive during rate cuts and those with high dividend yields.
Cramer said that by the time the Fed would announce its first rate cuts, it would have been “too late” to buy the stocks that benefit from rate cuts.
“You have to let them recharge, let them come down and then you can pull the trigger,” Cramer said.
In a separate program a few days ago Jim Cramer specifically talked about five industrial stocks he’s bullish on before rate cuts. In this article we mentioned these five stocks along with a few other stocks Cramer is talking about during his programs these days. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Micron Technology Inc (NASDAQ:MU)
Number of Hedge Fund Investors: 120
Jim Cramer said in a latest program on CNBC that Micron Technology Inc (NASDAQ:MU) could come down to $98 or $99 and the stock would be a buy “right there.”
Bank of America analyst Vivek Arya said in a latest note that if volatility dips in the semiconductor industry and the broader market sees a resurgence, Micron Technology Inc (NASDAQ:MU) would be one of the outperformers.
BofA Securities believes Micron Technology Inc (NASDAQ:MU) is one of the best beaten-down tech stocks presenting an attractive entry point following the latest selloff.
Bank of America analyst Vivek Arya recently also talked about the latest declines in semiconductor stocks. However, the analyst said most of the declines were due to temporary factors and fundamentals are still “intact.”
“AI still the strongest and most dependable area of capex, driven by domestic US tech companies with solid balance sheets, proven monetization and mission-critical imperatives…” Arya said.
Micron Technology Inc (NASDAQ:MU) posted quarterly results recently which came in better than expected but the market didn’t welcome the in-line guidance and rising expenses. However, this short-term view misses the fact that Micron Technology Inc (NASDAQ:MU) is investing heavily in high bandwidth memory (HBM) production that is expected to generate billions in sales by fiscal 2025 compared with just hundreds of millions in 2024.
After the earnings, Arya reiterated a Buy rating and gave a $170 price target on Micron Technology Inc (NASDAQ:MU).
“Mgmt emphasized both CY24 and CY25 volumes are now fully sold out with pricing generally secured, providing visibility to its healthy sales and margin expansions (HBM is GM accretive),” Arya said.
Here is what Micron Technology Inc (NASDAQ:MU) said about HBM during fiscal Q3 earnings call:
“Our HBM shipment ramp began in fiscal Q3, and we generated over $100 million in HBM3E revenue in the quarter, at margins accretive to DRAM and overall Company margins. We expect to generate several hundred million dollars of revenue from HBM in fiscal 2024 and multiple billions of dollars in revenue from HBM in fiscal 2025. We expect to achieve HBM market share commensurate with our overall DRAM market share sometime in calendar 2025. Our HBM is sold out for calendar 2024 and 2025, with pricing already contracted for the overwhelming majority of our 2025 supply. We are making significant strides toward expanding our HBM customer base in calendar 2025, as we design-in our industry-leading HBM technology with major HBM customers. We have sampled our 12-high HBM3E product and expect to ramp it into high-volume production in calendar 2025 and increase in mix throughout 2025.”
ClearBridge Value Equity Strategy stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q2 2024 investor letter:
“Stock selection in the IT sector proved to be the largest contributor to performance, particularly driven by the strong performance of Micron Technology, Inc. (NASDAQ:MU) The company, which designs, develops, manufactures and sells memory and storage products, continued its strong performance alongside other AI beneficiaries as the anticipated demand for new and additional storage essential for housing and training large language AI models continues to grow.”
Overall, Micron Technology Inc (NASDAQ:MU) ranks 1st on Insider Monkey’s list titled Jim Cramer Says Buy These 5 Industrial Stocks Before Rate Cuts — And 5 Other Stocks He’s Talking About. While we acknowledge the potential of Micron Technology Inc (NASDAQ:MU), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.