When Micron Technology (NASDAQ:MU) closed at a 52-week high in 2020, the market recognized the DRAM and NAND supplier for its value. Even at these levels, the stock trades at a P/E of around 20 times. MU stock has plenty of value from here.
If Samsung Electronics and SK Hynix do not raise capital spending on DRAM this year, it will prevent a glut in supply later this year. PC makers are benefitting from a surge in demand. The pandemic accelerated sales of PC for office workers at home and consumers staying at home. That trend will continue, even if the coronavirus vaccine works.
Companies will no force their workers back to the physical office in the near-term. A gradual return is more likely. This will keep lifting PC and laptop sales. A shortage in chips will push prices up and margins, too. Micron shares will keep rallying, as will other chip stocks. Applied Materials (NASDAQ:AMAT) is a diversified firm whose stock will rise. Lam Research (NASDAQ:LRCX) is still in value territory, too.
Your Takeaway
Micron shares are worth at least $80. Its fair value could increase if a chip shortage lifts prices. Micron’s competitors may increase supply, which would hurt everyone. Assuming that risk does not play out, Micron is a buy and hold from here.
