We recently compiled a list of the 10 Most Promising Future Stocks According to Analysts. In this article, we are going to take a look at where Micron Technology Inc (NASDAQ:MU) stands against the other Most Promising Future Stocks According to Analysts.
Rising Market Volatility
Volatility in the equity markets is poised to hit levels not seen for the better part of the year as investors battle a string of developments. The uncertainty around the upcoming US elections and the soaring geopolitical tensions in the Middle East are the latest headwinds sending shockwaves in the market.
A report by MarketWatch indicates that October could turn out to be a spooky month for equities as valuations appear overstretched, with major indices at all-time highs. Analysts are no longer ruling out the prospects of a market crash given that recession fears are rising even though inflation levels have dropped significantly, prompting the Federal Reserve to cut interest rates.
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While expectation is high that the US economy will achieve a soft landing on higher interest rates, leading to lower inflation without causing a major hit to the economy, Michael Darda, chief economist and macro strategist at Roth Capital Partners, is sounding warning bells.
The economist maintains we are marching on ice that’s a bit thinner, depicted by rising unemployment and elevated earnings expectations that triggered market routes in August and September.
“It’s not unprecedented to have a slowdown period that looks like a soft landing, and then a recession ends up taking shape,” he said. “That’s sort of unexpected now because many have been lulled into this idea that the soft landing is going to be a permanent state of affairs for the business cycle. Equity market valuations reflected that coming into the summer.”
“But there’s been some cracks in the business cycle,” he cautioned, noting expectations for the economy, corporates, and the stock market have remained at “super high” levels.
A slowdown in the US economy amid the high interest rate environment comes amid a highly charged election that threatens to rattle the stock market. While indices are at all-time highs at the back of one of the longest bull runs, the prospects of a deep pullback are growing as investors become more cautious ahead of the election.
While the US stocks have often rallied following a major US election, Former Goldman Sachs partner Abby Joseph Cohen believes things could turn around this time around.
“Historically when you go back many cycles you see that the US stock market does pretty well after a major election. There is a sigh of relief and also most people feel that their candidate has won. This year aim not convinced it is going to be a sigh of relief rally. In fact if anything I am quite concerned about what happens if there is agitation of any sort following the election because of uncertainty about results,” Cohen said.
Although there is a good chance that the US stock market will crash this time, many analysts are also saying that things might improve following a very bad September that also saw premium stocks like the S&P 500 plummet and hit all-time lows.
AI-related firms continue to drive market gains, with the S&P 500 up 21% year-to-date. Howard Chan, CEO of Kurv Investment Management, highlighted the importance of monetizing AI initiatives, noting Meta’s share price surge due to strong sales growth.
Analysts are increasingly focusing on promising future stocks, particularly those in advanced technologies, which are expected to withstand short-term pressures and deliver long-term value. Investing in industry leaders with a competitive edge and a strong track record of revenue and earnings growth, combined with low interest rates, is seen as a strategy likely to yield significant returns. Despite market volatility, certain stocks continue to offer substantial opportunities and the potential to generate significant long term value.
Source:pexels
Our Methodology
To make our list of the most promising future stocks to buy according to analysts, we made a list of 40 stocks with market capitalization greater than $10 billion, significant average analyst share price percentage upside, and an average rating of Buy or better. They were then ranked in ascending order based on analyst’s upside potential, and the most promising future stocks are as follows.
At Insider Monkey, we are obsessed with 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)
Number of Hedge Fund Holders as of Q2: 120
Analyst Upside as of October 10, 2024: 45%
Micron Technology Inc (NASDAQ:MU) is a promising stock because it focuses on future technologies, including artificial intelligence. Its memory and storage solution is critical for advancements in AI, machine learning, and data centres, affirming why it is one of the most promising future stocks, according to analysts.
The leading provider of DRAM and NAND memory plays a crucial role in the operation of semiconductor-driven devices and guarantees the seamless operation of software programs. The rationale behind investing in Micron Technology Inc (NASDAQ:MU) has shifted due to advancements in cloud computing and artificial intelligence (AI). These innovations have resulted in a continuous rise in the need for digital memory solutions.
Strong demand for memory solutions amid the AI race has enabled the firm to start fiscal 2025 with the “highest competitive standing in history. Unsurprisingly, this robust demand comes from the company’s data centre sector.
Additionally, the latest quarterly results affirmed strong demand for the company’s solutions as revenues increased 62% from the previous fiscal year to $25 billion. This growth has resulted in a gross margin of 22%, significantly better than the -9% gross margins seen in the previous fiscal year.
Furthermore, the leadership team managed to control the rise in operating costs, enabling the company to report a net profit of $778 million for the fiscal year 2024. This represents a remarkable turnaround from the $5.8 billion loss reported in the fiscal year before.
Micron Technology Inc (NASDAQ:MU) remains one of the most promising future stocks, having predicted revenue growth of 84% between $8.5 billion and $8.9 billion for its fiscal first quarter. For this reason, analysts rate the stock as a buy with an average price target of $148.68, implying a 45% upside potential. In addition to the significant price swing, Micron rewards investors with a 0.45% dividend yield.
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 2nd on our list of 10 Most Promising Future Stocks According to Analysts. While we acknowledge the potential of MU as an investment, 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, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
