It was a solid week for U.S. stock markets last week, with the S&P 500 rising 1.26% and the NASDAQ up 1.05%. The MCSI Emerging Markets Index eked out a gain of 0.13%.
Big gainers in your Bull Market Alert portfolio included The Bank of Ireland (IRE), which added 6.51%; Grifols, S.A. (GRFS), which gained 6.13%; and Russian Search engine Yandex (YNDX), which rose 2.29%.
Four of your current Bull Market Alert positions hit new 52-week highs: The Bank of Ireland (IRE), Google, Inc. (GOOG), Thermo Fisher Scientific, Inc. (TMO) and Grifols, S.A. (GRFS).
This week’s Bull Market Alert recommendation is Micron Technology (MU) — a red-hot semiconductor stock that has already generated over 188% for investors in the past 12 months, and it is already up over 11% in 2014.
Here’s why I expect Micron to move up even further in the weeks ahead.
First, Micron is in an enviable position in the otherwise boom-and-bust semiconductor sector. Demand for the DRAM, NAND flash and NOR flash memory it manufactures is exploding as modern smartphones, tablet computers and laptops require a lot more memory than similar devices made two years ago.
In addition, industry consolidation is allowing Micron to enjoy the benefits of reduced competition. And the industry’s focus on new technology should limit manufacturing capacity over the next few years — a factor that also is bullish for the stock.
Second, despite its recent strong run, Micron still looks surprisingly cheap. The stock currently is trading at a forward price-to-earnings (P/E) ratio of only 9.52, compared to 12.32 for Sandisk (SNDK). The company expects further earnings growth going forward after its strategic acquisition of Elpida. No wonder Micron is one of the top holdings of the biggest hedge funds, according to publicly available 13F disclosure filings.
Third, Micron pulled back in the past week and is now approaching technically oversold levels. This makes it a good time to take a position — especially given that the technology sector has been such a strong outperformer.
Several analysts have recently published very bullish pieces on Micron, putting a $40 target price on the stock. That’s over 65% upside from current levels.
So buy Micron Technology (MU) at market and place your stop at a wide $20.50. With Micron boasting a beta of 1.86, this is a volatile stock.
If you want to play the options, I recommend the July $25 calls (MU140719C00025000).
Finally, I wanted to share a link to my latest on Marketwatch.com, where I discussed Berkshire Hathaway’s (BRK-B) waning investment returns. It was one of the most popular articles on Marketwatch last week, and was even the subject of an article itself in the Brazilian financial press.
With Russia on the brink of war with Ukraine, you may be rightly wondering about your position in Russian search engine Yandex (YNDX).
While we cannot account for the vagaries of Russian foreign policy, the news from the company continues to be good. Yandex announced a partnership with Google (GOOG) last week to share online display advertising sales efforts. Google will connect its advertising DoubleClick bid-management platform with YNDX’s Real Time bidding system. In addition, Yandex’s AWAPS demand-side platform will be connected to Google’s DoubleClick AdExchange. This will super-charge Yandex’s online advertising abilities. It remains a HOLD.
The Bank of Ireland (IRE) is scheduled to report earnings today. This position is already up 49.90% this year. It is a BUY.
Thermo Fisher Scientific Inc. (TMO) declared a quarterly dividend of $0.15 per share. The dividend will be paid on April 15 to shareholders of record as of March 17. It remains a BUY.
Grifols, S.A. (GRFS) was upgraded last week to “Buy” by TheStreet.com, citing “solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, good revenue growth and notable return on equity.” Trading above its 50-day moving average, it is a BUY.
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As a courtesy, I invite you to take a look at the new 2014 version of The Top 12 Stocks You Should Buy Right Now, which features three of my top investment recommendations, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. In addition, I want to bring to your attention my latest special report, Top 4 Keys to Profiting in the New Wildfire Rally. Both of these reports are available on my website FREE for you and other subscribers.