Why Micron Technology Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Micron Technology (NASDAQ: MU  ) , a memory chip manufacturer in the semiconductor sector, roared higher by as much as 12% after reporting its second-quarter earnings results.

So what: For the quarter, Micron reported a 3% increase in total revenue, to $2.08 billion, but saw its loss widen to $286 million, or $0.28, from $282 million in the year-ago period. Wall Street had been expecting a loss of just $0.20 per share, but the $2.08 billion in sales was markedly higher than the $1.92 billion consensus. What really has investors excited is the combination of lower manufacturing costs and improving margins that portend profitability could be right around the corner. It was this that prompted research firm Credit Suisse to boost its price target on Micron from $8, to $14, as it sees favorable memory supply keeping Micron’s margins and memory prices up.

Now what: If you don’t know a thing about cyclical businesses, just buy a memory chip producer and hang on for a few years, and you’ll be an expert in no time. The time to buy a company like Micron is when no one wants to own a memory chip producer, and the time to sell is shortly after they become profitable and supply becomes favorable. We’re probably getting toward the upper-end of its cyclical trading range; so, while I still favor some modest additional upside in the company, I’m not expecting a blockbuster return.

Craving more input? Start by adding Micron Technology to your free and personalized Watchlist, so you can keep up on the latest news with the company.

The amount of data we store every year is growing by a mind-boggling 60% annually! To make sense of this trend and pick out a winner, The Motley Fool has compiled a new report called, "The Only Stock You Need to Profit From the NEW Technology Revolution." The report highlights a company that has gained 300% since first recommended by Fool analysts, but still has plenty of room left to run. To get instant access to the name of this company transforming the IT industry, click here -- it's free.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2328471, ~/Articles/ArticleHandler.aspx, 12/22/2014 2:14:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement