MU Still Has to be One of the More Mispriced Stocks in the Market

MMMTWealth
10-09 10:00

$Micron Technology(MU)$ still has to be one of the more mispriced stocks in the market especially after Davidson just raised their PT to $3,000.

Here's some key points on $Micron Technology(MU)$:

1. Keep saying it's cyclical all you want. It's still not.

-> 87% gross margins are not a sign of a "cyclical" stock.

-> $33B worth of FCF (61% margins) + cash position covering a further buildout is not a sign either.

2. If EPS doesn't grow from Q1 forecast...we're looking at $153 in EPS in FY27 which means the stock trades at 7x EPS.

-> For reference the $SPDR S&P 500 ETF Trust(SPY)$ now trades ~21x EPS.

3. 87% gross margins, 61% FCF margins, $68B of cash vs $5B of debt is all sign of a quality company.

-> That quality matters less if the spike is short-term but there is no argument to make right now that demand for memory doesn't grow in both training and inference.

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