Micron Technology, Inc. (NASDAQ:MU) has had an excellent time in 2017. Micron stock has risen more than 126% since the start of the year.
Revenues are skyrocketing amid an increasing demand for NAND and DRAM chips. The price of NAND and DRAM chips are also increasing amid a tightening supply. Micron has over 22% share of the global DRAM market.
Micron stock will continue to gain value as projections show that NAND and DRAM prices won’t show weakness before 2019. DRAMeXchange estimates that the demand of DRAM chips will increase by 20.6% in 2018. New DRAM supplies will arrive on the market, but not before 2019. As such, Micron has well over a year to reap benefits of the chips market.
The company is also steadily diversifying its revenue stream. The company recently launched a joint manufacturing facility where it will make 3D XPoint non-volatile memory for DIMMs and SSDs with Intel. The company also announced next-gen NVDIMM-N modules which combine DDR4 DRAM and Flash.
Taken from https://www.storagenewsletter.com/2017/07/25/prices-of-nand-flash-rose-by-26-in-1h17-in-china-china-flash-market/
Recently, Evercore ISI’s Rich Ross said in a report that Micron shares have the potential to rise more than 25% from their current levels. Ross is bullish on Micron stock because he expects the semiconductor industry to keep thriving. West Hollywood-based investment consultant firm Chantico Global CEO Gina Sanchez recently said in a statement that Micron will keep rising as the semiconductor industry has a lot of potential to run. Sanchez thinks that the demand of memory chips will increase because they are being used in augmented reality, virtual reality, Artificial Intelligence and smart manufacturing.
Earlier this year, there were concerns regarding Micron stock amid Samsung’s massive investment of over $18 billion in its semiconductor division. Analysts feared that Samsung would flood the market with new memory chips, resulting in an oversupply. But those fears are abating as experts think Samsung will not be able to proceed with its plans. The company has to keep up with its ambitious dividend plans. Samsung has doubled its dividend yield and will have to pay a whopping $8.6 billion in dividends next year. The new dividend plan will continue until 2020.
Micron stock has an attractive valuation. The stock has a forward P/E ratio of just 7.3. Micron’s debt is also low. The company is posting EPS growth consistently. All of these factors make the company a strong investment.