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Is Micron Technology a Buy?

DATE POSTED:September 17, 2019

It's hard to believe that a stock up 60% this year could still be considered "cheap," but that's the case with Micron Technology (NASDAQ: MU). It may also be surprising that investors have been so bullish on the name lately, given that Micron is perhaps the most front-and-center company in the 18-month-long U.S.-China trade skirmish -- even more than other affected tech stocks.

When the trade war first started, a high-profile news piece in the Wall Street Journal (subscription required) highlighted the theft of intellectual property by a former employee of the memory giant, allegedly passed on to Chinese memory upstart Fujian Jinhua Integrated Circuit Co. The U.S. Justice Department subsequently responded by banning semiconductor equipment sales to Fujian, essentially shutting down the potential competitor.

Yet even with the Chinese threat quashed (for now), Micron still has many Chinese customers, including the controversial Huawei. In addition, as a cyclical stock, Micron is vulnerable if there is a broader economic recession. Currently, the U.S.-China trade war hasn't exactly been resolved, and there's still the possibility of recession. So why is the market more constructive on Micron now, whereas it was so scared earlier this year?

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