By Peet Serfontein & Khumbulani Kunene
We initiate a long position with a target price of $116.00 and a stop-loss of $78.00 (Risk/reward ratio 1:2.4).
Micron Technology Inc (MU) is a global leader in the semiconductor industry, primarily known for its innovative memory and storage solutions. MU makes and markets Dynamic Random Access Memory (DRAM), NAND Flash (a non-volatile flash memory technology used for data storage in a wide range of electronics), and NOR memory storage products under the Micron and Crucial brands.
The company generates ~55% of its revenue in US. Its memory and storage solutions enable artificial intelligence and 5G in key market segments like mobile, data centre, consumer, industrial, graphics, automotive and networking.
Technically, a price developing double bottom pattern presents a promising investment opportunity (see the insert on the main chart). This pattern occurs when the stock forms two distinct lows at roughly the same price level, separated by a peak in between, indicating that selling pressure is weakening and the stock is finding strong support at that level. This pattern is regarded as bullish because it signals potential reversal in a downtrend. After the second low, buyers start to outweigh sellers, creating upward momentum. Confirmation that the stock has successfully tested its support and is set for a trend reversal is seen once the stock breaks above the peak between the two bottoms.
A price at the start of wave 5 of the Elliott wave price, also supports a bull case (see the notation on the chart). This pattern suggests that the stock is entering the final leg of an upward trend, potentially leading to further upward movement before a possible trend reversal.
Muted downside price momentum per the MACD indicator, as well as the sideways trajectory of the on-balance volume (OBV) indicator supports our bullish view.
| Share Information | |
|---|---|
| Share Code | MU |
| Industry | Semiconductors & semiconductor |
| Market Capital (USD) | 105.7 billion |
| One Year Total Return | -2.20% |
| Return Year-to-Date | 12.72% |
| Current Price (USD) | 0.95 |
| 52 Week High (USD) | 1.58 |
| 52 Week Low (USD) | 0.84 |
| Financial Year End | August |
| The stock price is sandwiched between its 200-week and 200-day simple moving averages (SMAs). The level of the 200-day is at $105.67. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (USD) | 1.30 | 6.92 | 10.78 | 11.69 |
| Growth (%) | 432.0 | 55.83 | 8.48 | |
| Dividend Per Share (USD) | 0.12 | 0.48 | 0.54 | 0.52 |
| Growth (%) | 320.87 | 11.36 | -3.53 | |
| Forward PE (times) | 13.72 | 8.80 | 8.11 | |
| Forward Dividend Yield (%) | 0.51 | 0.57 | 0.55 | |
| Strong earnings growth is expected in FY25 and FY26 with moderate growth thereafter. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view
| Share Name and Position | RCL US - Stop Loss (Exit the trade) |
STE US (Buy) (Continue to hold) |
CHTR US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 227.02 | 217.20 | 340.26 |
| Current | 207.23 | 228.06 | 355.87 |
| Movement | -8.7% | +5.0% | +4.6% |
| The trade reached our stop-loss level, and we closed the trade. We will reconsider exposure to the stock when market dynamics improve. |
An Elliott wave price that is forming a trough remains of interest. Remains above its 200-day simple moving average. Upside price momentum supports the trade strategy.
Our profit target remains at $239.00 with a trailing stop-loss at $210.00. Exit the trade by 18 April 2025. |
A price in a developing symmetrical triangle pattern remains of interest. Remains just above its 200-day simple moving average. The start of downside price momentum is a concern.
Our profit target remains at $390.00 with a trailing stop-loss at $330.00. Exit the trade by 30 May 2025. |
| Share Name and Position | MPWR US - Buy (Continue to hold) |
|---|---|
| Entry | 617.57 |
| Current | 570.34 |
| Movement | -7.6% |
|
A gap in the price remains of interest. Remains sandwiched between its 200-week and 200-day simple moving averages. The start of downside price momentum is a concern.
Our profit target remains at $788.00 with a trailing stop-loss at $552.00. Exit the trade by 2 April 2025. |
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