iPad Stock: The Best Company for the Tablet Craze (MU, AAPL)
The market was red hot Tuesday, obliterated Wednesday and asleep Thursday. Yesterday's activity was mild compared to the action earlier in the week, however volume levels were still decent. The Nasdaq edged higher but most indices dropped slightly.
The mild session was to be expected after the big decline a few days ago. The hangover from that decline kept most bulls on the sideline yesterday. It was also unlikely that sellers would be able to takeover our key target of 1301 support on the first try. As a result, very little was accomplished by either group (bull or bear) yesterday. Although one small victory for the bears was to temporarily take oil prices below $100.
I have mentioned on a few occasions that I believe oil is in a position to rally as long as $100 holds. A rally in oil, as well as other commodities, would also likely lead to a new higher high for the indices. This potential rally in commodities still appears likely considering that asset class is emerging from a strong decline in May and the dollar appears likely to hit new annual lows.
If oil holds $100, SPX should hold 1301. But if oil falls below $100 support, it becomes likely SPX will drop (sharply) to 1250.
Yesterday TradeMaster added shares of Micron Technology (NASDAQ:MU), which is one of the stocks from the Top Ten Trades of June report.
Micron is one company that has helped progress the modern day computer. The company designs memory cards, and the upgrades it made to NAND flash has enabled tablet makers, such as Apple (NASDAQ:AAPL), to use small, cheaper and faster memory chips.
Although the use of tablets will grow by leaps and bounds in the future, the biggest opportunity is not in the device makers, but in the suppliers who can design smaller components. Much like a human cannot work without a brain; a computer cannot function without a memory card.
Micron focuses on flash memory, which is becoming the new normal in memory. NAND flash memory cards are much faster at reading than writing. Additionally, no power is needed to store information on the chip. This type of memory card is highly durable, making it a must have for those who manufacture mobile devices that are frequently dropped - like cell phones.
These are the catalysts that make MU an attractive trade right now.
Riding the tailwinds of a growing tablet product market, maturing cell phone industry and a strong string of quarterly earnings, MU is too cheap. I think the stock finds support below $10 but above the rising 200 day moving average near $9.15. Now is a great time to buy shares and within the next five months I expect the stock to be trading above $13.
