Micron Technology, Inc. (MU), Lumber Liquidators Holdings Inc (LL), Dollar Tree, Inc. (DLTR): Three Stocks I’m Buying on Upgrades

Page 1 of 2

Analysts were hard at work on Monday – upgrading countless stocks – but these are the ones that I find most attractive. These three upgrades are well reasoned, and are stocks that I believe have a significant amount of upside potential.

Don’t fight the trend!

Micron Technology, Inc. (NASDAQ:MU)

In 2011/2012, I hated Micron Technology, Inc. (NASDAQ:MU) – but after seeing a 100% rise in DRAM prices and boosts in NAND – I am very optimistic. Moreover, Citibank is also optimistic, boosting the stock’s price target from $13.50 to $19 ahead of its fiscal third quarter report on Wednesday.

The firm believes that the Elpida deal will add $0.88 to annual EPS, which is actually conservative compared to some estimates. Simply put, this is a rapidly changing company. It is not the Micron Technology, Inc. (NASDAQ:MU) of old. It is acquiring the bankrupt Elpida, which creates great synergy, and the company continues to benefit from macro improvements.

In 2013, Micron Technology, Inc. (NASDAQ:MU) has rallied 110%, including almost 4% on Monday. In my opinion, this is a very good company with a bright future ahead. Thus, I wouldn’t assume that large YTD gains indicate limited upside, it still operates in a large market with a great deal of promise.

Expensive looks may be deceiving

Lumber Liquidators Holdings Inc (NYSE:LL) lost most of its early gains on Monday, but still traded higher by almost 2% after Piper Jaffray raised its price target from $90 to $97. The firm notes that channel checks indicate “accelerated market share gains, improvements in operational efficiency, and a compelling new store format.”

Piper Jaffray is estimating that Lumber Liquidators Holdings Inc (NYSE:LL) will earn $3.22 per share in 2014, far above expectations of $2.88. This would put the company trading at 30 times earnings. While this might sound expensive, it is just twice as expensive as The Home Depot, yet Lumber Liquidators Holdings Inc (NYSE:LL) is growing about 10 times faster. To me, this is a favorable ratio for Lumber Liquidators Holdings Inc (NYSE:LL), indicating that it might be cheap in a space that is expensive. Thus, I agree with Jaffray and I am buying the stock!

The quintessential example of efficiency

My last pick, but certainly not least is Dollar Tree, Inc. (NASDAQ:DLTR). The stock ticked higher by 2% on Monday after an Overweight rating was issued by JPMorgan, and a $55 price target. The firm believes that Dollar Tree, Inc. (NASDAQ:DLTR) will see a stable gross margin due to increased traffic and sales per square footage.

Page 1 of 2