Micron: A Buyout in the Chips?

04/28/2016 7:00 am EST

Focus: STOCKS

Briton Ryle

Editor, The Wealth Advisory

This global semiconductor company has the additional benefit of being a potential takeover candidate, suggests Briton Ryle, editor of The Wealth Advisory.

Micron Technology (MU) offers products for computers, servers, networking devices, communications equipment, consumer electronics, automotive, and industrial applications.

In its latest quarter, revenues of $2.93 billion missed estimates by $120 million. On the other hand, a loss of $0.05 per share beat analysts’ earnings expectations by $0.03, or 37.5%.

Results were impacted by continued weakness in the PC market, seasonality, and timing of product launches in other segments.

Micron is the tech value play of our future dividend payers. Sporting an extremely low valuation in comparison with its peers and the S&P 500, this is a diamond in the rough, so to speak.

Unlike much of the market, I see the potential here because along with a low valuation comes the prospective for a buyout.

Last summer, China Resources (HKG:0836), a giant state-owned conglomerate, was forced to rescind its $23 billion offer over concerns the deal would not be allowed by US regulators.

Even if it’s not acquired for a huge premium, we should see capital appreciation very soon.

The company is doing all the right things, and we should see much higher prices as the months pass — and a dividend payout in the future as well.

This stock remains a “buy” at prices under $15 with a 12-month price target of $25. It’s a steal at current levels, so if you don’t have a position yet, I’d recommend you establish one soon.

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By Briton Ryle, Editor of The Wealth Advisory

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