Original title: why can't this growth stock be missed after rising 25%? Source: China Finance Online Co Ltd website
Shares of computer memory maker Micron Technology (MU) suffered a sharp fall in 2019 as the market oversupplied. The novel coronavirus epidemic in 2020 aggravated the uncertainty of the company's development. But the latest quarterly results show that Micron has made a perfect counterattack. Micron third quarter results show that the company's performance not only exceeded market expectations, performance outlook is also better than market expectations. Given the recent drop in spot memory prices, the market was surprised that Micron's performance remained so strong.
But Micron's share price has risen nearly 25% since April. Can you do more now?
In the third quarter, Micron reported a 13% year-on-year increase in revenue, and Micron released an outlook for the next quarter, which is expected to generate $6 billion in revenue, up 23% from the same period last year. In addition to revenue forecasts, Micron expects the adjusted gross profit margin to reach 35.5% in the next quarter, up from 30.6% in the same period last year. Micron's gross margin in the third quarter was only 33.2%, down from 39.3% in the same period last year. In addition, adjusted earnings per share of $0.82 were also down from $1.05 in the same period last year.
The expected increase in gross margin in the next quarter shows that Micron now has a significant increase in bargaining power. CEO said at a recent earnings meeting that the average selling price of the Micron is rising, and shipments of DRAM and NAND are also growing.
Micron expects adjusted earnings per share of $1.05 for the next quarter, up from 56 cents in the same period last year. We can say now that Micron's next financial report will definitely take it to the next level.
Micron growth has been boosted by the rapid growth of data centers, mobile phones and games. Micron expects the momentum of these markets to continue in the second half of 2020. Management expects that there will be good factors with Dolly in the future. For example, the promotion of the 5G network will greatly boost Micron's performance growth. The smartphone memory business, which accounts for 28 per cent of Micron's total revenue, is growing at an annual rate of 30 per cent. In the future, large-scale production of 5G smartphones will stimulate the rapid growth of Micron's smartphone memory business.
It can be seen that the growth of Micron will continue for a long time, and it will certainly not lose momentum in the near future, but investors who want to get on the Micron stock now may have to pay a certain premium.
Micron now trades on a price-to-earnings ratio of about 25 times its five-year average. But the forward price-to-earnings ratio is only 9.5 times, which means that future earnings growth will accelerate.
And Micron is also worth paying such a high premium for investors, because after the epidemic, Micron will grow rapidly and deliver satisfactory results for investors.
So, this is the one that is stillIt's worth buyingGrowth stocks entered and held.