Micron Technologies, Inc. (NASDAQ:MU)'s stock price is slowly gaining momentum. In case you missed this DRAM company's deliberate upward trend for the past few days, Micron Technologies did a nice 8.5% five-day rally from November 8 to November 14. Micron is already up at $19.19 (as of November 14) and, in my opinion, it's a clue that another big boost is probably on the horizon for this stock.
Compared to 12 months ago, Micron has seen its stock skyrocket by 241%. Some investors were worried that the share has already reached its peak saturation level and the price dipped down last October. However, I was right to assume that Micron Technologies has yet to achieve its fair value price when the share price is only around $17.58. The events of the past five days confirmed my suspicion, Micron Technologies is possibly ready for a second bull ride this year.
The First Surge
Micron has made a lot of smart investors rich this year. From a 52-week low of $5.33 to its current $19 price level, Micron Technologies is 2013's undisputed star performer tech company. The stock is already up 200% for this year. The holiday season is just around the corner. There's a good chance that Micron will report a decent sales increase in DRAM and NAND flash products for the last quarter of 2013. This is due to the traditional surge in computer, tablets, and smartphones during the holiday season.
If you missed the previous Micron money train, there's still a chance to earn a modest profit from Micron's possible second wave of resurgence. While I originally said that the fair value of Micron Technologies for this year is around $20 to $21, there's a good chance the stock could breach $22 before the year is over. Analysts such as Sterne Agee also reiterated their Buy rating for Micron Technologies and gave it a similar $21 target price.
Micron Is Stronger With Elpida Acquisition
Micron has weathered the worst. It is now in a great position to ride the current upswing for mobile DRAM chips. It's purchase of Elpida makes it a strong contender for leadership in smartphone and tablet PC memory sales. The acquisition included a majority control and ownership of Rexchip and its 300mm DRAM factory in Taiwan.
Rexchip is a dominant force in mobile DRAM chips. With this subsidiary now under Micron control, the company is in a great position to offset its losses from declining PC sales. It is already projected that tablet computers and smartphones will continue to enjoy a double-digit annual increase in sales. Micron's core memory business has a great future ahead with new growth possibilities from mobile devices.
The Rexchip unit has an amazing research lab. The Taiwan-based company is recognized as one of the best innovators of NAND flash technology. It currently holds the record for having the world's smallest 128GB MLC flash memory device - the 16nm memory node makes it a perfect fit for small form factor devices like consumer MicroSD cards, smartphones, USB thumb drives, iPads, and Android tablets. Cloud computing companies who need compact and high-capacity hardware storage are also possible customers for the 16nm 128GB flash drive from Micron.
Elpida made Micron a worthy alternative to Samsung (OTC:SSNLF) in the mobile memory chip market. Elpida has been a major memory supplier to Apple (NASDAQ:AAPL). Elpida memory chips are inside the iPad 4, iPad 5, and Nexus 7. Apple's distrust of Samsung means Micron/Elpida will continue to retain the memory chip business from the iPhone maker. Other Android OS-gadget manufacturers like HTC, Lenovo (OTC:LNVGY), LG (OTC:LGEIY), will likely purchase from Micron rather than buy mobile DRAM chips from a competing brand like Samsung.
This rosy outlook for Micron in the lucrative mobile DRAM market is probably the main reason why a new rally for Micron is brewing. Several investors and hedge funds are betting on Micron, Billionaire Ray Dalio recently bought 800,000 shares of Micron Technologies. Seth Klarmen has also increased his position on Micron to 32% of his entire investment portfolio.
Micron Technology, Inc. has more room to grow next year. It has acquired the technology and factory capacity to satisfy the surging demand for mobile DRAM chips. Buy the stock before it breaches the $20 threshold. Do not let the billionaires and millionaires monopolize the new upward swing for Micron.