We recently compiled a list of 12 Best Large Cap Stocks to Buy Right Now. In this article, we will look at where Micron Technology Inc. (NASDAQ: MU) is among the greatest stocks to buy right now.
Is The Next Bull Coming In?
Analysts’ expectations about the Fed starting to cut three rates of 25 basis points each, starting in September, has become a hot topic in the current market. While some economic indicators are showing stability, recent market developments have raised concerns about a serious reduction in inflation. However, a recession seems unlikely, and sustained economic growth suggests a cautious but positive outlook for markets.
But the question is: why is there still talk of recession? We talked about this earlier in one of our articles, The 12 Best Small Cap Tech Funds to BuyHere is an excerpt:
“Inflation in the U.S. is likely to hit a 3-year low of 2.6% in August, the lowest rate since March 2021, according to a survey of economists by FactSet. It is believed that inflation, excluding the prices of food and energy, still 3.2%.
Inflation rose for 4 years to 9.1% in June 2022 as the economy rebounded rapidly from the pandemic recession. The Fed responded with 11 rate hikes in 2022 and 2023, raising its key rate to 23 years and increasing the cost of borrowing more in the economy. Lower inflation could pave the way for the Fed to start cutting interest rates next week. ”
Binky Chadha, chief global strategist at Deutsche Bank, joined CNBC last week to discuss what’s next for stocks, given the US election — especially the trend a typical retracement in the month leading up to the close race, where the market is usually down 4% to 5%. .
Chadha thinks that this trend, driven by uncertainty, causes investors to seek protection against uncertainty, which leads to lower commodity prices. This drop usually hits its lowest point on election day, followed by a large rally if the election result is clear and resolves uncertainty. Historical events, such as the Bush/Gore election, show that unsettled outcomes can exacerbate uncertainty, as seen in some of the stock markets’ declines during that period.
It is important to understand market trends in options, as delays can have a significant impact on investor confidence and overall market behavior. The current market is led by a significant rally in the S&P 500, which is reaching higher levels despite challenges such as high interest rates and political tensions. While election years often see market weakness, the performance of both candidates can reduce uncertainty. However, uncertainty is likely as elections approach and corporate earnings are closely monitored against higher expectations, according to Chadha.
Chadha went on to talk about the Bush/Gore election and when the Supreme Court decision seemed imminent, the market rose. However, this was followed by a further decline in the market. Although relying on one example for broad conclusions is not appropriate, this case shows the general behavior of the market. It is important to note that the existing method is good, although it has two problems.
Chadha said that while the S&P 500 has shown extraordinary recovery trends, rising with annual sales growth of 26%, this growth has slowed down dramatically over the past two years. As sales growth slows, concerns about a possible recession, leading to more questions about the negative sales growth in the S&P 500.
While Chadha believes that S&P 500 sales growth has returned to pre-epidemic levels, which means stability, there is also a slowdown in the labor market, especially in private sector wages over the past 7 months. Such mixed feelings should be given and used as a buying opportunity. With that, we bring you a list of the 12 best stocks to buy right now.
Method
For this article, we defined large stocks as those trading between $20 billion and $200 billion. We sorted our screen by market cap and looked at the top 25 stocks that matched our criteria. We then selected the 12 stocks that were the most popular among elite hedge funds and that analysts were following. The stocks are ranked in ascending order of the number of hedge funds that own shares in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds accumulate in? The reason is simple: our research has shown that we can outperform the market by mimicking the best hedge fund options. Our quarterly strategy picks 14 small and large stocks each quarter and has returned 275% since May 2014, outperforming its benchmark by 150 percent (syes more details here).
Description: Micron Technology Inc. (NASDAQ:IN)
Market Capitalization as of September 13: $100.41 billion
Number of Hedge Fund Holders: 120
Micron Technology Inc. (NASDAQ:MU) manufactures computer memory and computer data storage including random access memory, flash memory, and USB flash drives. Its products are used in a variety of devices, including smartphones, tablets, laptops and servers. It is a major player in the memory market and is known for its technological advancements.
In the third fiscal quarter of 2024, the company generated revenue of 6.8 billion dollars, against the figure of 3.7 billion dollars from the same period last year, jumping by ~82% per year. There is strong demand for AI, which is the main driver of this revenue growth. Even with a strong FQ3 2024, the company may be struggling due to the stockpile from last year, which is why last year’s earnings are much lower than this year’s. The company is investing heavily in bandwidth memory production that is expected to generate billions of sales in fiscal 2025 compared to only hundreds of millions in 2024.
Micron Technology Inc. (NASDAQ:MU) is well-positioned to benefit from industry trends in smartphones, personal computers, and data centers. That is why 120 hedge funds have shares of the company as of June 30. The largest position is $ 928.5 million per Citadel Investment Group.
Investors note that Micron’s current problems stem from its massive spending aimed at expanding manufacturing capacity. In FQ3, the company invested $2.06 billion in equity capital. However, the company sees that these investments are expected to drive growth in the future, especially since it is making these investments at the right time with support from the US government to improve its ability to to manufacture domestic semiconductor products.
Bolstered by strong demand for AI, the company is well-positioned to benefit from memory price volatility and good inventory balances, making it a must-buy stock right now.
ClearBridge Value Equity Strategy said the following about Micron Technology, Inc. (NASDAQ:MU) in its Q2 2024. investor letter:
“Property selection in the IT sector has proven to be a major factor in performance, particularly driven by the strong performance of Shares of Micron Technology, Inc. (NASDAQ: MU) The company, which designs, develops, manufactures and sells memory and storage products, has continued its strong performance alongside other AI beneficiaries as expected storage demand is new and more important for housing and training of large types of AI languages is growing. .”
In general MU level 2 on our list of the best major stocks to buy. While we accept the potential of MU as an investment, our confidence lies in the belief that AI stocks have the greatest promise to bring high returns and do so in the short term. If you’re looking for an AI stock that’s more promising than MU but trades for less than 5 times its earnings, check out our report on low price of AI stock.
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Description: None. This article was originally published on Insider Monkey.
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