1. Micron Technology, Inc. (NASDAQ:MU)
Stake Value of Point72 Asset Management: $206,353,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.82%
Number of Hedge Fund Holders: 83
Micron Technology, Inc. (NASDAQ:MU) designs, manufactures, and sells, memory and storage products worldwide. Last December, the company announced its financial results for the fiscal first quarter of 2022, reporting earnings per share of $2.16, beating estimates by $0.05. Micron Technology, Inc. (NASDAQ:MU) generated revenue amounting to $7.69 billion for the quarter, up 33.15% year-over-year, and beating estimates by $10 million.
This February, Wedbush analyst Matt Bryson upgraded Micron Technology, Inc. (NASDAQ:MU) to ‘Outperform’ from ‘Neutral’ and raised his price target to $120, up from $100. The stock has gained 11.23% over the past six months.
Insider Monkey spotted Micron Technology, Inc. (NASDAQ:MU) in 83 hedge funds’ portfolios by the end of the fourth quarter of 2021, one of which was Point72 Asset Management. The total stakes held by these hedge funds was in excess of $5.51 billion, up from just 63 positions in the prior quarter with stakes valued at just $3.84 billion.
Here’s what Hazelton Capital Partners had to say about Micron Technology, Inc. (NASDAQ:MU) in its third quarter 2021 investor letter:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
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