With September firmly in the rearview mirror, we’re now entering the seasonally strong time of year. In fact, the folks at Bespoke recently issued a report showing October has historically been one of the strongest months for the stock market on record. The Dow has tacked on an average gain of 1.96% in October over the past 20 years. So, where should your money be right now? I’ll answer that question for you in today’s blog…
First things first, though, I can’t stress enough how the financial media all too often "reacts" rather than "thinks." That’s why I always urge you not to get caught up in panic selling. Case in point. Last week, Wall Street overreacted to negative news that’s been plaguing Apple (AAPL), Amazon (AMZN), Facebook (FB) and Alphabet (GOOGL), and there was a serious correction in tech stocks last Monday.
What’s perhaps most interesting, however, is last Monday’s "tech wreck" didn’t drive investors to the sidelines. Instead, there was a big rotation out of tech and into crude oil, cyclical and dividend stocks. The fact of the matter is money isn’t leaving the stock market. Instead, it’s simply being reshuffled. And after Micron Technology (MU) topped analysts’ earnings and sales estimates in the latest quarter on Tuesday evening, investors poured back into tech stocks on Wednesday.
Now, Micron Technology is one of the largest producers of memory chips in the world. It’s also one of my favorite stocks for right now. Currently, the company employs 30,000 people across 20 countries, and it brings in over $12 billion in sales each year. Its biggest source of revenues are dynamic random access memory (DRAM) products.
Following the company’s better-than-expected fourth-quarter results last Tuesday, shares of Micron Technology jumped nearly 8% and breached a new all-time high. In fact, Micron Technology reported revenues soared a massive 91% year-over-year to $6.14 billion. Fourth-quarter earnings per share also surged to $2.02, up from a $0.01 per share loss in the same quarter a year ago. The analyst community was looking for earnings of $1.84 per share on $5.96 billion in sales. So, Micron Technology posted a 9.8% earnings surprise and a 3% sales surprise.
For the company’s fiscal year 2017, revenues rose 64% year-over-year to $20.32 billion, while earnings per share soared a tremendous 1,807.7% year-over-year to $4.96. That also topped estimates for earnings of $4.73 per share on $20.15 billion in sales. Company management noted memory chip demand remains strong, as data servers, as well as mobile devices, are requiring more memory.
As a result, looking ahead to the first quarter of fiscal year 2018, Micron Technology expects revenue between $6.1 billion and $6.5 billion, and earnings per share between $2.09 and $2.23. That’s well above the current consensus estimate for earnings of $1.85 per share on $6.06 billion in sales. So, it’s no surprise a handful of analysts also revised their price targets higher last week.
Add it all together, and you can easily see why MU maintains an A-rating in my Portfolio Grader tool. Remember, you can always run any of your favorite stocks through Portfolio Grader to see their overall grade in my system.
But before you go rushing out to buy MU stock, remember Blue Chip Growth members get instant access to my exclusive buy below price. Also, be sure to stay tuned into this blog right here for the rest of this week. I’ll be revealing even more of my favorite stocks for this seasonally strong time of year.