Barron’s Said Micron Was the Cheapest Stock in America. The Skeptics Were Wrong.

One twelvemonth ago, Micron Technology was trading astatine astir $70 a share. Today, Micron Technology (NASDAQ:MU) sits astatine $450.49, a summation of 557% implicit the past 12 months. The skeptics who doubted the setup person been proven incorrect successful spectacular fashion.

On the Barron's Streetwise podcast occurrence "The Cheapest Stocks successful America," Jack Hough laid retired a straightforward case. "Memory, of course, is successful fierce request for AI information centers, and that's led to shortages and soaring prices," helium explained. The halfway of the statement was an net explosion. Hough noted that Micron "never earned much than $12 a share," with its highest twelvemonth astatine "$11 and change" backmost successful 2018. The AI supercycle was pushing the institution into territory it had ne'er seen before.

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Hough besides identified the valuation paradox astatine work. "You tin get a debased P/E ratio by having either a debased P oregon a precocious E oregon some astatine the aforesaid time. But you tin besides person a rising P with an E that's conscionable rising a full batch faster." That dynamic, helium argued, was precisely what was unfolding astatine Micron.

The doubters had tenable grounds for caution. Semiconductor booms person a agelong past of ending badly, and Hough acknowledged that investors were taking a "my eyes deceive me" approach, having "seen capable semiconductor booms successful the past that fizzled." Co-host Jackson Cantrell remained skeptical astir whether the momentum would continue. Hough's ain anticipation was measured: "the banal stays astatine 4 times earnings, but past gradually investors travel astir and the banal keeps climbing."