Micron: First Quarter Earnings And Other Goodies For 2014

Dec.27.13 | About: Micron Technology (MU)

Micron (NASDAQ:MU) has had a magnificent run in 2013. The first article I wrote about Micron was back on September 27, 2012. It was about two products that seemed to have promise. One, PCM, sort of petered out, and one, the HMC, shows a great deal of promise for the future. This article pre-dated the tremendous rise in DRAM price. The stock price was $6.02.

On February 5, 2013, I wrote about Micron and the "perfect storm" and their "pivot" based on the fact that DRAM has increased in value by 50% from December 27, 2012. The stock price was $7.87.

Yesterday Micron stock closed at $21.74, up 253% from September 27, 2012, and up 176% from February 5, 2013.

I played it with options and recommended options or some combination of calls and stock.

I had truly amazing gains on this play and many here have had life changing gains on this run as well.

It would be hard to imagine how good it makes me feel that people have made some real money on this ride.

I have received some of the kindest and most complimentary emails and comments that an author could get. I also got a few Bronx cheers when I abruptly took profits a couple of weeks ago. That is also to be expected given that humans are a mix of the smartest and most complex critters on the planet. Turns out that for me the decision was the right one. The option I sold is down 33% from where I sold it.

I would have told everyone here about my "cold feet" decision, but Seeking Alpha is not an instantaneous communication medium. Can you imagine how an editor would receive and article submitted with the total content of, "I sold?"

I also have to point out that none of this would have been possible without Seeking Alpha. If you made some money AND had some fun on this ride you might think about dropping a compliment to the Seeking Alpha people who run the site and refuse to let it degenerate into the name-calling snake pits that some investment forums have become.

By the way, it is a well understood human psychological characteristic that we are much more sensitive to the loss of something we have than we are to gaining something we desire. This trait is used against investors every day in the stock market. That goosiness finally bit me at the 110x gain point.

OK, with all that out of the way, what is the next step? For me, it will be to play Micron for earnings with near to the money short term calls. With analyst estimates ranging form $.18 to $.72, there is no consensus, just an average, so options might be the most prudent trade in this case. A quick in and out with stock also gets the job done. The thesis here being that Micron earnings will be a blowout when reported on January 7, in which case the stock is likely to gap up toward even as high as $30 on January 8 and you will have a couple of weeks to see what happens. I intend to sell at least 50% the day after earnings regardless. If the earnings are so-so, the stock will probably not react negatively.

ElectricPhred, FredKao, rjackson 29, David Einhorn and many others think the number for 2014 will be in the $3.50-4.00 area. I'm at the high end of that…well, maybe a little bit over the high end, but then I am an uncontrolled optimist. Ok, Ok, I'm going to stand behind ElectriPhred with $3.50/4 or $.88

If we have an earnings blowout the gap up will signal that most of the action in Micron is over and it has become an earnings play for the next few quarters or a hold for shareholders.

So, 2014….I still like Intel (NASDAQ:INTC). I will take on a load of Intel for the Jan activity. On January 6 Brian Krzanich delivers the CES opening keynote address. There just has to be something good in that. A couple of days later the third party market guys will tell us about PC sales, which I believe will be unexpectedly strong. Then on January 16 Intel announces earnings and I think they sand bagged last quarter. by Jan. 17 the little January adventure is over. If you make money on that one you buy yourself something extravagant on Saturday.

A couple others that I will be looking at during 2014 are Quicklogic (NASDAQ:QUIK) which makes an ultra low sensor hub chip that will likely be in most mid to high range smartphones by the end of 2014. QUIK has options, but at $3.70 per share, play the shares. Here is a link explaining the technology. It is either a step to a ten bagger or 36 minutes wasted out of the only life you will ever get.

Then there is GasFrac (OTC:GSFVF), a Canadian oil services company that has a patented hydraulic fracturing method using jelled propane to avoid most of the ugly parts of water fracking. Website. Remember, many say that the way to make a small fortune in Canadian energy stocks is to start with a large fortune. I own it.

If you made money on Micron, good for you. If not there is always the future.

Good Luck and Happy New Year.

Disclosure: I am long INTC, MU, QUIK, OTC:GSFVF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.