What happened

Shares of Micron Technology (NASDAQ:MU) gained 87.6% in 2017, according to data from S&P Global Market Intelligence. Stock prices have more than tripled since the summer of 2016 as the memory-chip giant enjoyed a huge bounce back from the latest round of price wars in that industry.

So what

Over the same period, Micron's trailing top-line sales grew 33% to $23.2 billion. Due to stable fixed costs, that seemingly modest revenue increase led to adjusted earnings nearly tripling while free cash flows increased more than tenfold.

This surge was made possible by extraordinarily stable chip prices, even rising at times. In early 2018, the industry has reverted to the normal long-term trend of falling chip prices and even faster reductions in production costs per memory chip. Along the way, Micron beat analyst estimates in all four of last year's quarterly reports, often by a wide margin. Every shock to the Street's expectations brought another sudden surge in Micron's share prices, including a 6% jump on December's large earnings surprise.

A black NAND memory chip, sporting Micron's logo in gray ink

Image source: Micron Technology.

Now what

The memory-chip industry has been monstrously cyclical. Every period of strong chip prices has been followed by brutal supply-and-demand imbalances and plunging chip prices. Many Micron investors clearly expect another sudden downturn to break the current upturn, as the stock is trading at just 7 times trailing earnings today.

But this time may, in fact, be different. Analysts, market watchers, and industry experts have been on the lookout for signs of another downturn in the memory industry's cyclical history, but none have been found. The remaining handful of large suppliers are operating with a level of fiscal discipline unseen in earlier cycles.

So Micron's good times should keep rolling higher, extending last year's surging share prices even further. Simply getting back to more reasonable price-to-earnings ratios could double or triple its share prices from here, even if you don't expect any further increases in the actual earnings.

Bottom line: You didn't miss the boat quite yet. Micron is a buy today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.