Should you buy Micron stock in July as global semiconductor sales rise 26%?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jul 6, 2021
  • Micron stock bounced back nearly 1% on Tuesday after falling almost 5% late last week.
  • The company’s top line benefited from the 26% rise in global semiconductor sales in May.
  • So, as supply constraints ease, is it time to invest in MU shares?

US-based semiconductor company Micron Technology Inc. (NASDAQ:MU) shares bounced nearly 1% on Tuesday to trim last week’s declines. Investors responded to news that global semiconductor sales grew 26% year-over-year despite growing fears of supply constraints. The growing chip shortage rocked companies that rely on semiconductor products like motor vehicles. 

In return, semiconductor chip manufacturers like Micron Technology continue to benefit from the rising demand against limited supply.

Is Micron Technology stock a buy in July 2021?

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From a fundamental perspective, Micron Technology performed well in its most recent quarterly earnings report. The company’s bottom line came in better than expected, with an EPS of $1.88 compared to the consensus Street estimate of $1.72. 

Analysts still expect earnings to fall by 56.90% this year before rising by a whopping 91.71% next year. Long-term earnings growth prospects project EPS to grow at an average of 63.56% in each of the next five years. 

Micron stock trades at an attractive P/E ratio of 22.17. But even more compelling is the earnings growth of 91.71% for next year that prices the MU shares at a forward P/E of just 7.13. It makes Micron Technology an exciting investment opportunity in July.

Source – TradingView

Technical overview: Micron Technology’s stock price rebound seems poised to continue

Technically, the MU stock looks poised to continue upwards in the coming days amid a solid bullish momentum. In addition, Tuesday’s news about semiconductor sales growth in May coupled with supply constraints will keep the bulls optimistic in Q3.

Therefore, investors can target extended rebound profits at approximately $83.92 or higher at $86.51. The key support levels are $78.84 and $76.14.

The MU stock continues to trade in a choppy pattern formation, paving the way for more short-term pullbacks within the bull run.

Bottom line: the catalyst for buying MU shares in Q3 2021

In summary, Micron Technology’s stock looks attractively valued based on its P/E ratios. Moreover, the company’s future earnings growth for next year and the next five years will push the price higher.

Therefore, investors can choose to overlook the inevitable short-term pullbacks by buying the stock long-term. 

The MU stock has a lot of room to rise before running out of momentum.

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