Trading Micron's 50% Surge Amid Semiconductor Growth
Semiconductor chips are one of the most important elements across all economic industries. They are used in everything from cars to appliances and electronic equipment to factories.
Supply chain issues over the pandemic caused a huge shortage in chips, affecting global sales in nearly all industries.
With the semiconductor market expected to grow double digits this year to reach a record market value, now is an interesting time for semiconductor stocks such as Micron.
Keep on reading to learn more about how to trade Micron’s stock price.
|Symbol for Invest.MT5 Account:||MU|
|Date of Idea:||28 April 2022|
|Time Line:||1 - 6 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Why Trade Micron Stock?
According to a survey of 152 semiconductor professionals by KPMG, industry confidence for 2022 is extremely high. 95% of leaders expect company revenue to grow this year with 68% forecasting it will grow 11% or more.
Interestingly, this optimism is against the backdrop of 56% of leaders believing there will still be chip shortages well into 2023. Demand is expected to come from wireless communications, automotive and the Internet of Things.
In fact, according to an analysis from Deloitte, the recent chip shortage of the past few years has resulted in missed revenue of more than $500 billion, highlighting how much demand could be unlocked moving forward.
It’s unsurprising then why analysts at JP Morgan and Citigroup have recently put out buy ratings on semiconductor stocks such as Micron – a major player in the semiconductor sector.
Source: TipRanks, 27 April 2022
Micron is a stock that has consistently reported earnings per share above analyst estimates, as shown in the chart above. In Micron’s most recent earnings report, both revenue and profits exceeded analyst expectations with the company also providing a positive fiscal Q3 outlook.
Revenue for the next quarter is expected to be in the range of $8.5 billion to $8.9 billion which is higher than the consensus projections of $8.06 billion. Micron’s technology leaders have also announced plans for continued growth in 5G and data centre chips which should help the company’s bottom line.
Micron Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for a Micron stock forecast in the last 3 months, there are currently 15 buy, 2 hold and 0 sell ratings on the stock. The highest price level for a Micron stock forecast is $165.00 with the lowest price target at $83.00.
The average price target for a Micron stock forecast is $115.94 which represents a near 73% upside from current levels, at the time of writing.
Source: TipRanks, 27 April 2022
An Example Trading Idea for the Micron Stock Price
An example trading idea for the Micron stock forecast could be as follows:
- Buy the stock on a break above $76.50 to allow for current volatility.
- Target just below the average analyst price target at $115.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Micron shares:
- If target is reached = $385.00 potential profit ($115.00 - $76.50 *10 shares).
It’s wise to remember that the share price is unlikely to go up in a straight line and it may even go much further down before it rises, especially considering the recent sell-off in global stock markets.
Therefore, be sure to exercise good risk management which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and the risks involved.
Another factor to consider is the commission as these can eat into your profits. With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share. This means buying 10 shares in Micron stock would result in a commission of $0.20 ($0.02 * 10 shares).
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Micron Stock in 4 Steps
With Admirals, you can buy shares in companies like Micron with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for Micron at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.
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Do You See the Micron Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Micron's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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