Once Samsung (SSNLF) entered the market and began growing share on the strength on its ascendant smartphones, Micron's margins and pricing power immediately got squeezed.
With nowhere to turn, management saw consolidation and acquisitions as means of survival. One of these bets was on bankrupt Elipida, which, when you think about it, was an easy bet to place, given that Apple (AAPL) was already using roughly 80% of Elipida's memory capacity. With that in mind, investors spent all of 2013 buying into the promise. Now management must deliver the goods.
To the extent that Micron can beat these estimates while also demonstrating improved cash flow and margin expansion, the Street will reward the stock with a higher multiple. This is even though Micron has already outperformed virtually every other name within the group, including Qualcomm (QCOM) and Broadcom (BRCM).
[Read: Beyond 'The Wolf of Wall Street': People Who Profited From Crimes]
I have to believe that all of the "easy money" on this stock has already been made. With 240% gains on the table, the Street will be pleased if Micron merely meets expectations and demonstrates improving margins and stronger pricing power.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV