Facebook Inc (FB), Micron Technology, Inc. (MU): One Tech to Buy, Two to Avoid as Bear Bets Rise

Micron Technology, Inc. (NASDAQ:MU)

Short-selling in shares of Micron increased by 10.7%, to 72.2 million shares, by the end of February. Micron recently peaked at $9.75, as price increases for dynamic random-access memory (DRAM) helped push shares higher.

MU data by YCharts

DRAM prices rose despite a weakness in the PC market. Helped also by higher NAND prices, Micron Technology, Inc. (NASDAQ:MU) is positioned to hold its gains if memory prices remain stable. Last year, NAND flash memory sales dropped 7%. HIS predicts sales in this industry will increase by 14%, or $22.4 billion. Ongoing strong demand for mobile devices like tablets and smartphones will assure NAND demand will remain strong in 2013.

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bottom line

Competition is rising for Akamai’s product and guidance was not as strong as investors hoped. The company is also shifting away from low margin contracts, and working to win more profitable businesses. This means that bears will have the upper hand in the short-term as the business transitions. Akamai is a company to avoid for now.

Short-sellers have an upper hand on Facebook. Shares appear to have peaked at $32 in January. There are three reasons Facebook’s core business will be hurt over the long-term. The rising usage for Google+, competition from Twitter, and risks associated with sustaining revenue growth from its mobile initiative will limit upside in its shares. Facebook Inc (NASDAQ:FB) is a company facing competition from many directions despite its initiatives, and should be avoided.

Despite the recent pull-back, Micron appears to be the company whose shares should have limited downside. A recovery in NAND and DRAM pricing will be especially beneficial for Micron. Micron recently closed its acquisition of Elpida and its financials are stable: Micron Technology, Inc. (NASDAQ:MU) refinanced $440 million of its debt in early-February by issuing convertible senior notes due in 2033. The issue will replace senior notes due in 2014 and pay 1.875%. Micron is a company to buy once selling pressure eases.

The article One Tech to Buy, Two to Avoid as Bear Bets Rise originally appeared on Fool.com and is written by Chris Lau.

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