We recently compiled a list of 8 Most Active US Stocks To Buy Now. In this article, we will look at where Micron Technology Inc. (NASDAQ:MU) ranks among the most active US stocks to buy now.
Market Will Likely Remain Resilient
Amid economic uncertainty and upcoming elections, analysts are adopting a cautious stance due to market volatility driven by mixed investor sentiments. It’s being noted that while the Fed’s easing cycle could yield positive market outcomes in the coming months, immediate stock performance remains uncertain as many investors prefer to wait until after the elections to commit capital.
Vance Howard, CEO of Howard Capital Management, is of a similar view, as he is predicting a significant rate cut in early 2025 due to declining inflation. He emphasized that markets typically rise following initial rate cuts and advised investors to remain optimistic despite current market fluctuations. Howard recommended focusing on resilient sectors like utilities, real estate, and technology, while also considering financials as likely beneficiaries of future rate cuts as we approach 2025. We actually covered his opinion in more detail in our 8 Best Inexpensive Stocks To Invest In Now article, here’s an excerpt from it:
“Howard pointed out that historically, after the first rate cut, markets tend to rise, with a perfect record of being higher 7 out of 7 times following such cuts. He also noted that if the S&P 500 has already gained 10% in the first half of the year, there is an 83% chance of continued upward movement in the second half. Therefore, he advised investors to remain optimistic and not be overly distracted by current market noise.”
Liz Young Thomas, SoFi head of investment strategy, joined ‘Squawk Box’ at CNBC on September 30 and shared her insights regarding the market’s trajectory as it approaches an easing cycle. She acknowledged that while there has been a significant run-up leading to this cycle, much of the substantial gains may have already been realized.
However, she noted that this does not necessarily mean the market will slow down immediately. Historically, after the first rate cut, markets tend to remain flat or slightly up in the following 30 to 60 days. 3 months post-cut, the market evaluates whether these cuts were necessary due to cooling economic conditions or if they were merely opportunistic adjustments.
Young highlighted several positive factors contributing to the current market rally. Despite a slight pullback in technology stocks, she observed that many other stocks are performing well, with 80% of the S&P 500 trading above their 200-day moving averages. This indicates a strong internal market dynamic. Additionally, optimism surrounding potential stimulus measures from China adds further support to market sentiment.
When discussing valuation concerns, Young agreed that while US market multiples are relatively high, hovering around 21 to 22, this is not unprecedented when compared to historical standards. She pointed out that current valuations are above both the 5-year and 10-year averages but not at overbought levels. Young referenced Warren Buffett’s long-term investment philosophy, emphasizing that he does not focus on timing market multiples but rather on fundamental growth.
Young expressed a desire for the market to shift towards trading based on fundamentals rather than multiple expansions. She noted that while earnings stability is crucial, there are signs of strength in sectors outside of technology, particularly in industrial stocks. However, financials have shown mixed signals.
As for identifying sectors with potential for faster earnings growth, Young emphasized the importance of thorough research and analysis rather than relying solely on top-down market movements. She identified healthcare, especially biotech and pharmaceuticals, as a promising area for growth. Healthcare tends to perform well in environments characterized by a steepening yield curve, which has been observed recently.
Moreover, she cautioned against assuming certainty in market outcomes. With prevailing confidence in a soft landing scenario from both the market and the Fed, she advised investors to remain vigilant and consider protective strategies. She suggested exploring opportunities across the Treasury curve, particularly in shorter-duration bonds, as a hedge against potential faster-than-expected rate cuts by the Fed.
Young’s insights propose that by focusing on sectors with strong fundamentals and remaining adaptable to changing conditions, investors can position themselves for potential gains while being mindful of risks associated with high valuations and economic uncertainties. With that said, we’re here with a list of the 8 most active US stocks to buy now.
Methodology
We sifted through Yahoo Finance’s list of the most active US stocks that are experiencing high trading volumes. We looked at the top 15 US stocks to find the ones that were the most popular among elite hedge funds. We then narrowed down our list to the 10 stocks with high trading volumes and those that were the most popular among hedge funds. The stocks are ranked in ascending order of their trading volumes, as of September 30.
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).
Micron Technology Inc. (NASDAQ:MU)
Volume: 42.96 million
Average Volume (3-Month): 25.039 million
Number of Hedge Fund Holders: 120
Micron Technology Inc. (NASDAQ:MU) is a producer of computer memory and computer data storage including dynamic random-access memory, flash memory, and solid-state drives. It is one of the world’s largest manufacturers of DRAM and NAND flash memory, which are essential components in various electronic devices. Beyond memory, the company offers services like design assistance, testing, validation, and supply chain management to support customers throughout the product lifecycle.
The company launched a new high-performance solid-state drive. Twice as fast as its predecessor, this drive offers significant speed improvements for gamers, students, and creatives. With capacities up to 2 terabytes and read/write speeds of 7,100/6,000 MB/s, the new drive expands its portfolio to include PCs, laptops, and PlayStation 5.
In the closing fiscal fourth quarter of 2024, the company generated $7.75 billion in revenue, recording a 93.27% improvement year-over-year. This growth was driven by record revenues for NAND and storage business units, fueled by robust demand in the data center and automotive industries.
A major win this quarter was the company qualifying its 1-beta-based 16Gb LP5 DRAM for the automotive market, offering 9.6 Gbps speed to support AI advancements in digital cockpits and ADAS. While the automotive industry adjusts to changing customer demand for EV, hybrid, and traditional vehicles, Micron Technology Inc. (NASDAQ:MU) expects automotive growth to resume in the second half of fiscal 2025.
The company’s strong performance is driven by the growing demand for high-bandwidth memory chips, particularly in AI computing. The CEO’s positive outlook and forecast for record revenue and increased profitability in the coming quarters highlight its promising future.
Parnassus Value Equity Fund stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q2 2024 investor letter:
“Micron Technology, Inc. (NASDAQ:MU) posted fiscal-third-quarter results that met expectations. Micron’s DRAM (dynamic random access memory) and NAND (non-volatile storage technology) segments grew revenue strongly, continuing the company’s recovery from a cyclical downturn last year. We believe Micron is well positioned to capitalize on AI-driven demand for greater memory.”
Overall MU ranks 7th on our list of most active US stocks to buy now. While we acknowledge the growth potential of MU, our conviction lies in the belief that AI stocks hold great promise for delivering high 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 on Insider Monkey.
