Do you recall my (Cara 100) call on Micron Tech (NASDAQ:MU) a month ago? I opined that MU had hit the Cara Accumulation Zone and was close to being considered a BUY. I still had some reservations at that point, so I would only write puts.
Since then, I have earned the premium on the puts, and had the time needed to watch the pricing of the NAND and DRAM markets, which have been bottoming. Now I think it’s the time to buy the stock, or at least consider doing so if you are bullish on the broad market. Remember, the markets are nervous of a likely pull-back here, but I am taking a 1 to 3 year time horizon on the stock.
Tonight after the close, Micron reports on 2Q07. I expect a soft report. But, the stock is now selling close to book value, and the NAND spot pricing has really picked up, and the market for DRAM is looking much better.
Credit Suisse issued a new OVERWEIGHT rating today. Its report indicates huge increases in revenues, gross profit (as percent of revenues), operating and net income and EPS for the year-ended Aug-07 and again for the year-ended Aug-08.
This stock may not recover to 2006 highs above $18 ($18.65 on Sept 12) for a while, but I believe it is possible you may not again see it in the Accumulation Zone (as it hit a low of 11.22 on March 19). Of course, if the broad market crashes this year, this is a stock that still may have downside (from the current $12.23), although limited.
Disclosure: Continuing to write puts. Personally waiting until the next sell-off before buying the stock.