Why Micron Technology Inc. Shares Will Fly Near $35

Does this analyst make a good case? Or is it just more noise from Wall Street?

May 19, 2014 at 12:09PM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Micron Technology (NASDAQ:MU) gained about 2% this morning after RBC Capital upgraded the DRAM products specialist from sector perform to outperform.

So what: Along with the upgrade, analyst Doug Freedman raised his price target to $34 (from $27), representing about 31% worth of upside to Friday's close. So while contrarian traders might be turned off by Micron's price strength over the past year, Freedman's call could reflect a sense on Wall Street that industry tailwinds give the company plenty of room to run.

Now what: According to RBC, Micron's risk/reward trade-off is rather attractive at this point. "While Micron could be viewed as a restructuring story in the near term given its many moving parts, we believe that the company's efforts to improve NAND quality should become more transparent through the next 6-12 months," said Freedman. He continued:

On the DRAM side, higher margin levels are likely sustainable given mix-shift movements, upcoming 20nm cost-downs, fundamental industry shifts in participants, and tight industry supply (low channel inventories). ... Our view remains that the memory industry is benefiting from the law of diminishing cost savings, which is expected to result in a multi-year cycle of higher revenues and operating margins in both DRAM and NAND.

When you couple Micron's red-hot stock price -- now up about 150% over the past year -- with its still-hefty debt load, however, I'd hold out for a much wider margin of safety before buying into that bull case. 

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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