1. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 83
PE Ratio: 9.51
Micron Technology (NASDAQ:MU) is a technology firm which specializes in memory and storage products used by a range of industries such as computing, automotive and consumer electronics. With the increased adaption of smartphones with 5G capability, Micron Technology (NASDAQ:MU) is expected to benefit as these devices use considerably more memory and storage components in comparison to 4G handsets.
For the fourth quarter, Micron Technology, Inc. (NASDAQ:MU) posted an EPS of $2.14, which beat estimates by $0.16. The quarterly revenue of $7.79 billion was above analysts’ forecasts by $241.85 million, and showed an increase of 24.86% year-on-year.
On March 30, Mizuho analyst Vijay Rakesh maintained a ‘Buy’ rating on Micron Technology, Inc. (NASDAQ:MU) stock, and raised the price target to $113 from $110. He sees the firm well-positioned for the year, with strong quarterly growth in storage and computing, and longer-term tailwinds from product mix and content increases.
Out of the 924 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021, 83 were long Micron Technology, Inc. (NASDAQ:MU), as compared to 63 in the preceding quarter which shows growing investor confidence in the firm.
Investment firm Hazelton Capital Partners mentioned Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter. Here’s what the fund said:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
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