Micron stock is looking like a good swing long setup and a good buy and hold stock too. What could have changed everything with this stock is this morning’s news that the U.S. and China are restarting talks to defuse the trade war between the two countries.
Think about it. China has seen the EU work a deal with President Trump which was devastating to their goal of separating us from Europe. Now China sees the U.S. close to a deal on NAFTA too. Meanwhile, China’s own economy is in a lot of trouble and while devaluing the yuan may offset U.S. tariffs, it makes everything they have to import much more expensive. China’s main imports are crude oil ($220.7 billion), iron ore ($95.6 billion), plastics in primary forms ($46.2 billion), copper and copper alloys ($38.6 billion), and soybeans ($35 billion). China’s yuan devaluation to counter tariffs will make oil and hence gasoline much more expensive for Chinese citizens which will cause a contraction in domestic spending. The average price for a litre of gasoline in China was 7.31 (renminbi) at the start of April 2018. The average price per litre of gas is now 7.65 (renminbi).
These “quiet” talks with China are probably why we have not heard any news about the $16 billion in new tariffs the President said was coming in “two-weeks” back on July 6, 2018. This is the week that we should have gotten news about new tariffs against China and so far, things are quiet. That suggests that China may be willing to negotiate a better trade deal with the U.S.
Micron stock is a beast and it’s a bargain at current price levels IMO. It trades at a P/E of 5, and a forward P/E of 4. The reason it’s so cheap right now is that it sells about half of its chips to China. Any positive news on the trade war with China could send Micron stock soaring IMO.
Revenue has grown by 61.42%! Wow! Revenue has been growing by an impressive 25.36% on average over the past 5 years.
Micron stock is in a Symmetrical Triangle pattern and I don’t think it can go much lower from here. There is a support zone below the current price at $52.49, a stop order could be placed below this zone.
I’m adding Micron stock back to the long-term buy and hold Technology portfolio.
Disclosure: As Premium members know, I went long MU stock today.