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How Safe Are Your Micron Profits?

NEW YORK ( TheStreet) -- With year-to-date gains of 12%, chip giant Micron's (MU - Get Report) stock is now up a staggering 252% since the end of 2012. The stock closed Tuesday at $24.44, up 3.3%.

Calling Micron's performance "impressive" would be an understatement. Investors that passed on this company over fears about high-end device saturation and low average selling prices are deservedly kicking themselves. This chip has sailed.

But no time for regret. The more pressing question has to do with current investors. There's no doubt that they've done well. Nine months remain in the year, so how much gas does this stock have left? Management has pushed all the right buttons. But with chip names like Broadcom (BRCM) still seeing weakness, should Micron investors press their luck?

Micron will report second-quarter earnings Thursday. The Street will be looking for earnings of 74 cents a share on revenue of $3.975 billion. This suggests year-over-year revenue growth of 91%. That's an imposing revenue number, supported by what the company has done recently.

In the January quarter, Micron demolished revenue estimates with 103% year-over-year growth. Equally remarkable was the 69% year-over-year jump in DRAM revenue. I don't want to downplay this sort of performance, but we need to keep it in perspective.

Micron's business is based on flash memory, or non-volatile storage technologies that requires no power to retain data. Micron has capitalized on the growing popularity of products built with solid-state drives. And management has doubled-down on their investments to produce SSD devices to fulfill this demand. It's been a great strategy.

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