Micron Technology (NASDAQ:MU) had an impressive 2019, and it’s on the path to deliver more gains for its shareholders in 2020 despite being a volatile stock. However, the volatility can’t be ignored.
Micron has a wide-ranging product portfolio
To begin with, Micron has an attractive product portfolio in storage and memory space. It is among the three main producers of DRAM, one of only two companies producing 3D Xpoint memory and among the six major producers of NAND flash storage. Although it doesn’t produce hard disk drives its NAND flash storage is nevertheless displacing those in most applications.
Its storage and memory products are important kin next-gen applications such as IoT, AI as well as 5G communication. Memory and storage are essential in these applications that require faster data transmissions. However, the company’s products are highly commoditized, and thus, pricing of the products tend to rely on demand and supply.
Despite the oversupply, Micron has managed to remain profitable, but analysts are expecting its earnings per share to dip to $2.28 when the year ends in August. Currently micron stock trades at around $56 which is 24.5x this year’s earnings estimates.
What To Watch With Micron Stock
Can Micron turn things around in the market? This entails growing earnings per share and offering predictable and steadier results. The company has been focusing on industry consolidation by acquiring distressed competitors in the past. These helped it consolidate the DRAM market, reducing to only three players. Although consolidation helps in easing oversupply, memory companies have been struggling with tech constraints in production. Companies will thus invest significantly to enhance operations which might hinder supply.
Compared to competitors, Micron has been improving its operations and has surpassed them in various fronts. For instance, the company produced mass DRAM chips in August last year using the 1z manometer process. The other aspect that will help Micron stand out among peers is its strong balance sheet and share buybacks.